Oil pipeline holding company Plains GP rises 5 pct in market debut
Oct 16 (Reuters) - Shares of Plains GP Holdings LP, the holding company for pipeline operator Plains All American Pipeline LP, rose 5 percent in their market debut, valuing the company at about $14 billion.
Plains GP raised $2.82 billion on Tuesday after its offering of about 128 million Class A shares was priced at $22 apiece, the low end of its expected price range.
This is the largest IPO for a U.S.-based company since Facebook Inc's $16 billion offering in May last year and tops Pfizer Inc animal health unit Zoetis Inc's $2.24 billion offering in February.
Plains GP does not have any operating activities. It gives financial support to Houston-based Plains All American Pipeline, a master limited partnership (MLP) transporting, storing and selling oil and natural gas liquids.
On average, Plains All American handles over 3.5 million barrels of crude oil and NGL per day across the U.S. Gulf Coast, the Permian basin and the Eagle Ford shale field in Texas. The company also operates in Canada.
Many energy companies have turned to tax-efficient corporate structures called MLPs, which rely on easy access to capital markets to fund growth. Such partnerships are typically made up of assets such as pipelines or long-lived oil and gas fields that generate steady cash flows.
The Plains GP IPO comes at a time when infrastructure companies are trying to expand their pipe networks to cash in on the demand to move burgeoning U.S. oil and gas output to refining hubs.
MLPs have benefited from the recent rise in natural gas liquid prices, which are correlated to more expensive crude oil.
Among other pipeline-related MLPs, there was the August debut of QEP Midstream Partners LP and World Point Terminals LP, while Midcoast Energy Partners LP filed for an IPO in June and Cheniere Energy Partners LP filed in September.
Barclays, Goldman Sachs and JPMorgan were the lead book-running managers among a syndicate of 34 banks underwriting the Plains GP offering.