Petrobras’s IPO just got a little more intriguing. The Brazilian oil giant has announced that it will add another 376m shares to its offering, under an over-allocation option. That could take the IPO to a total of $79bn – three-and-a-half times the world record set by AgBank earlier this year.
The question is why. Does Petrobras think the IPO is going well or badly?
The bearish view is that demand is so low that Petrobras needs to sell the extra shares to finance its $224bn investment plan. (Thursday’s FT suggested why this may be the case: the IPO process has dissatisfied many investors, in Brazil and the US.)
Chris Huhne, the UK’s energy secretary, said yesterday he was worried about the “financing of big renewable projects, particularly big wind farms”, which could hinder the government’s pledge to make sure 15 per cent of the country’s energy comes from renewable sources by 2020.
He has reason to be worried. At the height of the financial crisis, some of the UK’s biggest wind power projects were hit by a wave of withdrawals from financiers. In May 2008, Shell backed out of the London Array, while later that year, BP said it would focus instead on US wind power. Then, early last year, Iberdrola said it would cut its investment in the UK by 40 per cent.
But Huhne may be being a little disingenuous here. Industry sources tell us the major disincentive from building wind power capacity at the moment is not a lack of private investment, but worries about the government’s commitment to the necessary infrastructure.
China is rich in coal-bed methane, a gas that can be used for fuel. But production has not proved easy. This year output of the gas will be less than a quarter of the official target.
Transport is a key obstacle. China’s pipeline network is dominated by oil giants CNPC and Sinopec, making it difficult for gas suppliers to get access. Now one company, Green Dragon Gas, has found a way to skirt the issue – by selling its coal-bed methane directly to customers.
… it is now.
Well, sort of.
We are hearing KNOC and its advisers Merrill Lynch swept the market for a 29.9 per cent stake in Dana Petroleum on Friday morning. The trades haven’t printed yet but they will.
Merrill is believed to have bought stock from shareholders who had already pledged to back KNOC’s £18 per share offer for the oil explorer.
KNOC had letters of intent from 48.6 per cent of Dana’s shareholders to accept the offer, which put them in a very strong position to close the deal.
By acquiring stock on Friday it has reaffirmed its to commitment to the deal and signalled that it wants to complete the acquisition of Dana as soon as possible. The reason Dana didn’t buy more shares – ie go above 30 per cent – is that it would have triggered a mandatory offer and that would have reset the takeover timetable.
Shares in Dana are up 4p at £17.91 at pixel time.
Elsewhere this Friday
- Could carbon-absorbent foam help solve climate change?
- China and India’s coal challenge
- Small modular nuclear reactor comes one step closer
- Algeria goes unconventional