Venture Global, a US energy company, has been valued at over $60 billion in its initial public offering (IPO), which is a significant reduction from its earlier target exceeding $100 billion. The IPO was priced at $25 per share, raising a total of $1.75 billion. Initially, the company aimed for a valuation as high as $110 billion, surpassing that of major oil corporation BP, before adjusting its offering this week.
Insiders indicated that the reduction in size and timing reflected investors’ concerns regarding high valuations within the US stock market, even as banks on Wall Street prepared for multiple IPOs. One prospective investor mentioned that the bankers for Venture Global provided justification for the high valuation, but they felt pressured into accepting it, expressing frustration with the communication regarding investor sentiment.
Cole Smead, the CEO of Smead Capital Management, which has invested approximately $1.5 billion in the energy sector without participating in Venture Global’s IPO, noted the challenges of capital raising in this industry. Venture Global refrained from commenting on the situation.
The IPO follows an announcement from US President Donald Trump to restart licensing for liquefied natural gas (LNG) terminals, reversing a moratorium from the Biden administration that had drawn criticism from industry leaders. Venture Global has developed connections with the incoming administration; CEO Mike Sabel attended a dinner with oil and gas executives at Mar-a-Lago, where Trump reportedly sought campaign donations linked to policy changes. The company previously contributed $1 million to Trump’s inauguration campaign.
Sabel and co-founder Robert Pender, who own 84% of the company, are known for pioneering modular construction of LNG facilities, which allows for significant prefabrication to minimize costs and shorten project timelines.
Venture Global has established itself as an emerging player in the LNG sector, which typically relies on strong relationships with key customers who enter long-term contracts necessary for financing terminal construction. However, following the surge in LNG prices due to Russia’s invasion of Ukraine in 2022, the company controversially opted to sell large volumes of gas on the spot market instead of fulfilling existing long-term contracts. This decision has led to arbitration claims totaling $5 billion from Shell, BP, and other foundational customers, who argue that Venture Global breached its commitments.
Operating two LNG terminals on the US Gulf coast, the company maintains that it did not violate any contracts. The IPO was jointly managed by Goldman Sachs, JPMorgan, and Bank of America.
photo credit: www.ft.com
