First Reserve-backed KrisEnergy to raise $213m in IPO

The company is offering 151.9 million shares - subject to the over-allotment option - priced at S$1.10 apiece plus a further 94.1 million shares that have been subscribed to by cornerstone investors. Just over half the proceeds will be used for capital expenditure, including exploration, appraisal and development of existing assets, with about 25% of the remainder earmarked for acquisitions.

KrisEnergy's management team comprises geoscientists, engineers and operations specialists with considerable experience in Southeast Asia's oil and gas sector. They have leveraged their knowledge and relationships to build a portfolio of 14 oil and gas field contract areas in Cambodia, Indonesia, Thailand and Vietnam.

Two more acquisitions are in the pipeline, which would see the geographical footprint expand to Bangladesh.

Prior to founding KrisEnergy, the team created Pearl Energy, an E&P player with a similar remit that won early backing from 3i Group in 2004 and was later sold to Mubadala. Their success gave rise to several other PE-backed players in the region, including Salamander Energy, Mitra Energy and Black Platinum.

First Reserve provided KrisEnergy with $500 million in start-up capital in 2009, of which approximately $300.9 million has been invested. The equity commitment will be withdrawn post-IPO. First Reserve currently owns 78.9% of the company but this will fall to 45.2% after the offering.

Keppel paid $115 million for a 20% holding in the company in July 2012 and last month exercised a call option to take its stake up to 36%. Keppel is participating in the cornerstone tranche of the IPO but its stake will still be diluted to 31.4%.

PE interest in Southeast Asian oil and gas is tied to the region's growing importance as an energy hub. Asia is growth long and resources short, and the likes of China, India and Indonesia will account for the bulk of new energy demand in the next 20 years. They are inclined to look for supplies on their doorstep.

According to the International Energy Agency, countries outside the Organization for Economic Cooperation and Development will account for 57% of global oil demand by 2035, up from 44% in 2011. China's oil needs are expected to rise by two thirds over the same period.

On the supply side, Southeast Asia is interesting for two reasons: the decline in liquids and the rise of liquefied natural gas (LNG). Both offer opportunities for private equity, either backing independent E&P companies that want to tap mature and isolated reserves, or supporting service providers looking to capitalize on the huge spending plans of Asia's national oil companies.

"There is private and corporate money going into these operations and if it continues to be successful we will see more capital markets activity as well," says Jamie Paton, managing director for Asia at First Reserve, told AVCJ earlier this month. "Southeast Asia isn't as mature as the Gulf of Mexico or the North Sea but at this stage in its development it's good to see companies like Pearl Energy, Salamander Energy and KrisEnergy succeed."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Industrials
• Southeast Asia
• Exits
• energy
• Commodities
• Southeast Asia
• First Reserve Corp
• Exit
• IPO