Venture Global lowers IPO valuation

Venture Global LNG has sharply lowered its IPO valuation to $60.5 billion before its debut on public markets on Friday, but still set to be one of the largest US-listed energy companies, reports Reuters.

The LNG exporter cut its valuation by 40 per cent from $110 billion after investors and analysts termed it 'lofty', on doubts over its estimated long-term profit from liquefying gas for export and ongoing legal battles.

It sold 70 million shares to raise $1.75 billion on Thursday, selling the stock at $25 compared to its offer price of $23 to $27. This was a far cry from its initial plan to raise as much as $2.3 billion by selling at $40 to $46.

The market debut will serve as the first big test for energy companies under an administration led by President Donald Trump, who has prioritised increasing US energy output and rolling back his predecessor's climate policies.

"A less talked about issue of the deal is the extremely low float... which is highly unusual and presents a significant risk factor due to overhang down the road," said Josef Schuster, CEO of IPO-focused investment indexes, IPOX.

Venture Global began generating revenue in 2022 when its first facility, Calcasieu Pass, started producing superchilled gas.

A reduced IPO valuation of $60.5 billion still puts Venture Global in the league of top U.S. energy companies, dwarfing high-profile names such as Occidental Petroleum, Marathon Petroleum, and Schlumberger.

LARGEST LNG IPO IN HISTORY

Venture Global's share sale marks the biggest IPO ever by an LNG company globally, according to Dealogic data. It is the third-largest energy and utility sector listing in the US since 1995.

"The high market cap reflects the company's ambitious development plans," Einhorn of Renaissance Capital said. "The company will definitely need to raise more capital over time, both equity and debt, to finance its growth plans."

If the stock does well at debut, it will handily surpass rival Cheniere Energy, the world's largest LNG exporter that commands a valuation of $52.4 billion on the NYSE.

In addition to Cheniere, Venture Global competes with Freeport LNG, TotalEnergies, Chevron, ExxonMobil, Petronas, among others for a share of the lucrative market.