Trinidad and Tobago NGL Ltd.’s (NGL) initial public offering was oversubscribed by more than 50 percent by the Sept. 9 closing date.
Officials at the National Gas Company (NGC) — NGL’s parent company — were pleased with the IPO performance, according to a company statement: “This is demonstrative of well-placed investor confidence in the strength of the underlying asset, PPGPL, and public appreciation of this unprecedented opportunity to own a stake in energy.”
The issue raised $2.2 billion ahead of the targeted $1.5 billion, despite concerns about the political climate, falling product prices and declining gas supply. The strong demand disproves predictions that shares would have been merely subscribed or undersubscribed, according to JMMB Securities (T&T) Ltd. Research Officer Michael Jordan.
Jordan said that performance of the IPO was likely due to a combination of investor faith in the company and excess liquidity in the market. “There are not a whole lot of alternatives,” he said. “Investors may have money they want to invest, but not very many options.”
Shares were oversubscribed in all investor classes: individuals and employees; mutual funds; pension plans, credit unions, cooperatives and National Enterprises Limited (NEL); National Insurance Board (NIB) Trinidad and Tobago; and other companies.
In his report to shareholders, former NGC chairman Roop Chan Chadeesingh said that the sale would “give the national public a chance to invest and own a part of the nation’s natural gas resources assets.” This idea of citizens sharing in energy sector earnings was widely promoted through an advertising campaign carrying the tagline “Energy We Own.”
Individual investors stand to gain the most, with an expected 60 percent allotment of shares, as outlined in the IPO prospectus. Mutual funds are expected to be allocated 10 percent; pension plans, credit unions, cooperatives and NEL get 15 percent; 10 percent has been allocated to NIB; and other companies will get five percent. NGC has said that investors should receive notification of their allotments around Oct. 9.
A report from Bourse Securities Ltd. suggests that the spread of smaller allocations to institutional investors could stimulate secondary trading when NGL is listed on the Trinidad Stock Exchange on Oct. 12.
NGL has not yet made an official statement about dividend payments, but Bourse forecasts a yield of about 6 or 7 percent.