Linc Energy launched its IPO today with a very thick prospectus. It is offering 47,850,000 shares at $1.20 each of which only 500,000 is reserved for the public. The IPO will close on 16 Dec 2013 at 12pm.
Linc Energy was delisted from the ASX to float on SGX to "improve access to capital markets" and reposition the business to deliver its "long-term growth strategy." You can read an article from Bloomberg here. From the look of it, the amount raised of S$47.9m is frankly insignificant. As such, i would not deem this as a real "IPO" but more of a relisting exercise. There will be an over-allotment issue of 4m shares.
Linc Energy is a diversified energy company with a portfolio of different assets.
Linc Energy believes it is the only company in the world to have produced diesel and jet fuel using its proprietary UCG technology (whatever that is...). It has three business divisions
Conventional Oil and Gas
Unconventional Oil and Gas
The Company has well laid out strategies for the near term but it will probably cost money as it accelerates its exploration program.
I am a layman in this but this technology seemed interesting where it produced diesel and jet fuel from this technology.
The Company has been making losses for the last 3 years but this is not surprising, considering the 2 last E&P companies, KrisEnergy and Rex International.
Looking at the cashflow statements, the Company is raising debt from notes issuance to pay for its oil and gas exploration program. It is interesting to note that the EBITDAX for its Oil and Gas assets for FY2013 is around US$78m. (The EBITAX for KrisEnergy based on its prospectus was US$60m).
It is interested to note that investors are paying par to get into this company. As mentioned above, this is not a fund raising exercise.
What I like about the Company
- Largest independent upstream oil & gas exploration and production company.
- Largest Singapore-listed coal company
- Strategically located assets globally, especially in Gulf Coast, US and Australia.
- Interesting proprietary UCG technology
- Investors are buying in at close to par value (see Dilution section above) with increasing revenues prospects (see Future Plans)
- I don't really know how to value this company
- The oil exploration may not yield the intended returns
My Chilli Ratings
Despite the down-trending market, KrisEnergy and Rex International are still 13% and 22% above its IPO price respectively. In this regard, given that investors to Linc Energy are buying in at par value with clearly outlined future plans, i will give it a 2 Chilli ratings. I also like that fact that it is the largest coal company listed here (if you still remember the de-listing of Straits Asia Resources). From the grapevine, I heard that the demand for the shares are pretty hot. My personal view is that you will be able to hit and run but I would have been more convinced if the market sentiments is better that what it is right now. With only 500,000 shares available, it will not be easy to get for the retail investors, so good luck if you are trying.