- Shares fell 0.8%, in line with the sector index
- The company raised £288 million to pay down debt
- The listing comes during a drought in the IPO markets
LONDON, Nov 9 (Reuters) – Shares in Ithaca Energy made a London debut on Wednesday after the North Sea oil and gas producer defied choppy markets to deliver Britain’s biggest initial public offering (IPO) this year and Europe’s fifth largest.
Shares opened 2% below their issue price of 250p a share and briefly fell as much as 4% to a low of 240.05p before recovering to 248p, up 0.8%. At the same time, the pan-European STOXX 600 (.STOXX) fell 0.4%, while the European oil and gas index fell 0.9%. (.SXEP)
The IPO, which was priced at the lower end of the expected price range, initially valued the company at 2.45 billion pounds ($2.83 billion). The top of the original price range would have valued it at £3.1 billion.
Ithaca took in £288m in revenue this year amid a stock market drought, with global IPO revenue down more than 70% year-on-year, according to Dealogic.
The London Stock Exchange has seen its worst year for UK IPOs as market volatility remains amid the energy crisis and deteriorating economic outlook.
“Ithaca’s IPO has come in a difficult broader market context, and the near-term weakness is likely to underline this,” said Investec analyst Nathan Piper.
Proceeds from UK equity sales have fallen 95% so far this year, with just two of the 38 listings in the UK being in the utilities and energy sector, generating just $5m, compared to $910m in the region so far collected. according to Dealogic.
So far in 2022, global utilities and energy IPOs above $100 million have returned an average of 19.9% after one day, according to Dealogic, compared with negative returns for European utilities and energy IPOs and UK IPOs across all in industries.
Ithaca, owned by Tel Aviv-listed Delek Group ( DLEKG.TA ), is being watched for investor interest in energy producers in the North Sea, an aging basin where private equity firms have bought assets in recent years but have held back. IPO.
Ithaca’s move to capital markets comes amid renewed government interest in the North Sea region amid the energy crisis, with Britain recently launching its first round of oil and gas exploration licensing since 2019 in a bid to boost local production.
Ithaca, which produces about 70,000 barrels of oil equivalent per day, wants to use the IPO proceeds to pay down debt, which stood at $1.4 billion at the end of June.
The last oil and gas producer to float on the main London stock exchange was eastern Mediterranean-focused Energean ( ENOG.L ) in 2018.
Goldman Sachs ( GS.N ) and Morgan Stanley ( MS.N ) are joint global facilitators for the deal, while HSBC ( HSBA.L ), Jefferies ( JEF.N ) and Bank of America ( BAC.N ) are joint bookrunners, with ING (INGA.AS), which acts as the main manager.
($1 = 0.8649 pounds)
Reporting by Emma-Victoria Farr, Joyce Alves, Shady Nasralla and Lucy Raitano; Edited by Amanda Cooper and Mark Potter
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