Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
US energy group Venture Global has been valued at just above $60bn in its initial public offering, marking a climbdown from a much loftier target of more than $100bn.
The company priced its IPO at $25 a share, raising $1.75bn, according to a statement. It had said earlier this month that it was seeking to achieve a valuation of up to $110bn — more than oil major BP — before scaling back its offering this week.
People close to the deal said the size and timing of the cut underscored investors’ nervousness about elevated valuations in the US stock market even as Wall Street bankers were gearing up for a flurry of flotations.
One potential investor said Venture Global’s bankers had walked them through its pricing rationale and why it was going with such a high multiple. “I pushed back on them initially and then they tried to insist that I was the odd one out and that all other investors were OK with the much higher multiple. Gaslighting at its best,” the person said.
Cole Smead, chief executive of Smead Capital Management, which has invested about $1.5bn in oil and gas companies but did not invest in the Venture Global IPO, added that raising money on public markets was particularly tough for companies in the energy sector.
Venture Global declined to comment.
The listing comes after US President Donald Trump this week ordered the restart of licensing for LNG terminals, ending a Joe Biden-era moratorium that had caused uproar among oil bosses.
Venture Global has built strong ties with the incoming administration. In April, chief executive Mike Sabel attended a dinner hosted at Mar-a-Lago for oil and gas executives, where Trump allegedly made a request for $1bn in campaign donations in return for ripping up environmental policies. The company contributed $1mn to Trump’s inauguration campaign.
Sabel and co-founder Robert Pender, who control 84 per cent of the company’s shares, pioneered modular construction of LNG facilities, which enables much of the prefabrication work on the giant facilities to be completed off-site to reduce costs and project delivery times.
Venture Global has earned a reputation as an upstart in the LNG industry, which has traditionally valued close relationships with foundation customers, who sign long-term supply contracts that enable companies to raise finance to build terminals.
But when Russia’s full-scale invasion of Ukraine in 2022 caused LNG prices to skyrocket, the company made a controversial decision to sell large amounts of product on spot markets, rather than honour long-term contracts. Shell, BP and several other foundation customers have filed arbitration claims worth $5bn against Venture Global, arguing it had reneged on long-term commitments to them to profit off the spot market.
The company, which operates two LNG terminals on the US Gulf coast, denies it broke any contracts.
Goldman Sachs, JPMorgan and Bank of America acted as joint bookrunners Venture Global’s IPO.
