Antero Midstream GP LP sails smoothly through Debut Issuance
Antero Midstream is a natural gas producing company that is based in Denver, Colorado. The company owns interests in Antero Midstream Partners from which it draws most of its revenue stream. At present Antero Midstream GP LP is the second largest producer of natural gas in the Appalachian region. That makes it among the top ten in the whole of the United States.
Before the IPO, no one could really be sure which side of the pool Antero Midstream would end up on. Some investors were optimistic about the IPO because Antero Midstream’s financials, were on the right track. For example, the company reported that it’s revenue had increased between 2015 to 2016. The proceeds moved from $387.3 million to $590.2 million. Furthermore, the firm’s cash flow at the end of the twelve-month 2016 period was positive with $6.8 million in cash and related forms. Antero Midstream’s liabilities were also $897 million against $1.98 billion in assets. The liabilities might have been lower than asset value, but they were still high enough to shift the midstream’s favor to the deficit side.
Investors also had the negative side of the company to be consider before giving their verdicts. One worry was that the increased revenue that the company experienced during the last two years was a result of growth in demand for E&P services globally. It sounds silly when you hear it the first time but look at this. If the result was only a result of short-term demand, then there’s no way for you to know if the demand will hold up in say, the next ten years. Similarly, the current worldwide oil glut has raised concerns about the financial position of all companies within the oil and energy industry. Potential investors pondered on whether it was profitable to invest in Antero Midstream given that the company’s bottom line could tank at any given point in the volatile market. The drop in revenue would be felt because Antero Midstream gets all its income from Antero Resources, which is an E&P dependent firm.
Despite all the pros and cons that hung over Antero Midstream in the days before its IPO, the company fared quite well in its first day on the NYSE market. The company sold its shares under the label of AMGP. By selling 37.3 million shares with each share going for $23.50, within the set range of $22 to $25, the company made $375 million in IPO proceeds. The proceeds allowed the natural gas producing firm to reach a market capitalization of $3.37 billion. The company has an overallotment option of 5.6 million shares for its underwriters to raise further capital.
All of the shares up for sale during the IPO came from shareholders intent on selling off their holdings. Therefore, none of the proceeds from the IPO will go to Antero Midstream.
The underwriters for the deal were Morgan Stanley, Wells Fargo Securities, Barclays, Citi, Goldman Sachs, JP Morgan, Baird, Credit Suisse, Scotia Howard Well, Tudor Pickering Holt & Co., Evercore ISI, Raymond James, D.A. Davidson & Co., Janney Montgomery Scott, Ladenburg Thalmann and MUFG.