The IPO Buzz: IPO Wind Shifts to Natural Gas

The calendar for the week of May 4 listed nine health-care IPOs; six got priced, five traded below their initial offering prices, one traded marginally higher, one was postponed, and the other two were pushed into this week. That pretty much says it all, but don’t give up the ship.

This week’s calendar has nine IPOs and six are health-care deals; none appear on anybody’s “most wanted” list, according to a multitude of sources.

The natural gas limited partnerships are a different story.

The price of crude oil popped back above $60 a barrel last week for the first time since December. The rebound from oil’s recent slide coincides with the natural gas sector’s growing appeal in the IPO market over the past eight weeks.

Last week we were entertained by Tallgrass Energy GP, LP (TEGP), a Leawood, Kansas-based limited partnership that holds general and limited partner interests in natural gas limited partnership Tallgrass Energy Partners LP (TEP). The latter is a master limited partnership that provides natural gas transportation and services in the Rocky Mountain and Midwest regions and crude-oil transportation in Wyoming and the surrounding area. It priced its IPO of 41.5 million shares at $29 each to raise $1.2 billion, UP 33 percent from 35.3 million shares at $24 to $27 each to raise $900 million, its original proposed offering terms. The IPO opened at $30.90 on Thursday, May 7, and closed its opening day at $31.75, UP 9.48 percent from its initial offering price.

The first IPO this year from the natural gas sector was the Feb. 5, 2015, offering of Columbia Pipeline Partners LP (CPPL), a Houston-based limited partnership formed by NiSource to own, operate and develop a portfolio of pipelines, storage and related midstream assets. It priced its IPO of 46.8 million shares at $23 each to raise $1.1 billion, UP 34.6 percent from 40 million shares at $19 to $21 each to raise $800 million, its original proposed offering terms. The IPO opened at $28 on Friday, Feb. 6, and closed its opening day at $26.79, UP 16.5 percent from its initial offering price. It closed Friday, May 8, at $26.29, UP 14.3 percent from its IPO price.

That brings us to this week’s IPO calendar. Overall, it has nine offerings – seven new faces and two carryovers from the past. However, there is one deal that is reportedly on everybody’s “most wanted” list. It is a natural gas limited partnership.

EQT GP Holdings, LP (EQGP – proposed) is a Pittsburgh-based limited partnership formed to own partnership interests in EQT Midstream Partners, LP (EQM), a growth-oriented limited partnership formed by EQT Corporation (EQT) to own, operate, acquire and develop midstream assets in the Appalachian Basin. EQT is an investment-grade natural gas producer with about 630,000 gross acres within the Marcellus Shale as of Dec. 31, 2014.

(For more information, please click here: EQT GP Holdings, LP)

Looking into next week, the IPO calendar has two offerings. Nevertheless, the calendar has been known to fill up quickly on Monday mornings. This time last week, the calendar for the week of May 11 had just two deals; now it has nine IPOs.