(Updates with analyst comment in third paragraph.)
June 9 (Bloomberg) -- Former BP Plc Chief Executive Officer Tony Hayward will raise 1 billion pounds ($1.6 billion) in an initial public offering to target oil acquisitions in “emerging and under-developed” regions.
Backed by financier Nathaniel Rothschild and veteran Goldman Sachs Group Inc. banker Julian Metherell, the investment vehicle known as Vallares Plc will seek to buy a company or asset with an enterprise value of 3 billion to 8 billion pounds within two years, according to Hayward.
“There could be significant interest,” said Gianna Bern, president of Chicago-based Brookshire Advisory and Research Inc. “There is no shortage of small-cap emerging market companies that could utilize Vallares because the public market capital raising process has become onerous and extremely expensive.”
Vallares has a “pipeline of potential deals” and will focus on emerging markets such as Russia, Latin America, Africa or the Middle East, Hayward said in an interview, without identifying any specific targets.
“Many high quality international resource assets have been acquired by family owned or private companies in the last few years,” Hayward said today in a statement. “We will have the cash, access to funds and the capability to unlock value where the current owners have neither the capital nor technical expertise to develop the assets.”
Modeled on Rothschild’s Vallar Plc, which raised 707.2 million pounds in a July IPO to buy mining and commodity assets, Vallares will be listed on the London Stock Exchange. The placing price will be 10 pounds for each ordinary share and the order book will close around June 20, according to a statement.
“We have widespread support in the U.K. and in the U.S.” from potential investors, Hayward said. “A couple of sovereign funds will participate as well. We have a strong belief that we are going to be successful in raising the money.”
At least 10 London IPOs were pulled or postponed this year, compared with four in the same period last year, according to data compiled by Bloomberg. The U.K. vacuum maker Edwards Group Plc, Russia’s Nord Gold and eight other firms canceled or delayed stock sales which were seeking as much as $5 billion, the data show.
“Think of this as a way of shortcutting an IPO process,” Hayward said. “If you are an emerging market company wanting to raise capital through the capital market, then the process of coming to London via an IPO is quite long and difficult. It takes three or four years.”
Vallares doesn’t plan to snap up assets from major oil companies, which are selling mature assets and directing capital at exploration, and will instead look for smaller companies.
Teaming up with Vallares would be an “attractive proposition” for such a company, he said.
Hayward resigned from BP in October following the Gulf of Mexico disaster. Before becoming CEO in 2007, he headed BP’s exploration and production division for five years, taking charge of all the company’s oil and gas fields worldwide.
Credit Suisse Group AG is acting as global co-ordinator and is also the joint bookrunner with JPMorgan Cazenove.
Rothschild, Hayward, Metherell and Tom Daniel, who was involved in the IPO of Vallar, have committed 100 million pounds of capital to the new company, including 80 million pounds to subscribe to the placing.
The board of directors will be chaired by Rodney Chase, former chairman of Petrofac Plc, and the board will include Jim Leng, former chairman of Corus Group Plc.
Vallar agreed in November to invest $3 billion in Indonesian coal companies PT Bumi Resources and PT Berau Coal Energy in a stock and cash transaction.
--With assistance from Zijing Wu in London. Editors: Stephen Cunningham, Alex Devine.
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