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US energy group Venture Global slid below its listing price in its stock market debut, after sharply downsizing its offering earlier this week in a gloomy start to the year for Wall Street initial public offerings.
The LNG exporter’s shares dropped as much as 5 per cent to $23.76 after trading began on Friday on the New York Stock Exchange. They later recovered to $24. The fall in its share price contrasts with an average first-day jump of 14 per cent last year for groups worth at least $50mn, according to IPO research provider Renaissance Capital.
Venture Global had initially sought a valuation of $110bn — higher than oil behemoth BP — but sharply downsized its offering this week, achieving a value of just over $60bn, after investors balked at the initial terms. The group raised $1.75bn in the IPO.
People close to the deal said the size and timing of the cut underscored investors’ nervousness about elevated valuations in the US stock market, even as Wall Street bankers were gearing up for a flurry of flotations. Concerns specific to the deal also weighed on demand, investors said.
Michael Alfaro, chief investment officer of hedge fund Gallo Partners, said “the pre-launch excitement for Venture Global evaporated when management persistently pushed for a valuation nearly double its peers”.
One potential investor added that Venture Global’s bankers had walked them through its pricing rationale and why it was going with such a high multiple. “I pushed back on them initially and then they tried to insist that I was the odd one out and that all other investors were OK with the much higher multiple. Gaslighting at its best,” the person said.
A banker whose firm worked on the deal expressed surprise at the lukewarm debut, saying there were many investors “who are deeply unhappy”.
Venture Global co-founder and chief executive Mike Sabel dismissed concerns about the scaled back listing, telling the Financial Times in an interview on Thursday night that the outcome was an “extremely successful raise” at a “great transaction price”.
The listing comes after US President Donald Trump this week ordered the restart of licensing for LNG terminals, ending a Joe Biden-era moratorium that had caused uproar among oil bosses.
Venture Global has built strong ties with the incoming administration. In April, Sabel attended a dinner hosted at Mar-a-Lago for oil and gas executives, where Trump allegedly made a request for $1bn in campaign donations in return for ripping up environmental policies. The company contributed $1mn to Trump’s inauguration campaign.
Sabel said the IPO process was not timed to coincide with Trump’s inauguration but added that the change in administration would boost the oil and gas industry. “The Trump administration is really a great opportunity for investors to benefit from what will likely be tailwinds in the permitting and regulatory and global political discussions that are coming,” he said.
Sabel and co-founder Robert Pender, who control 84 per cent of the company’s shares, pioneered modular construction of LNG facilities, which enables much of the prefabrication work on the giant facilities to be completed off-site to reduce costs and project delivery times.
Venture Global has earned a reputation as an upstart in the LNG industry, which has traditionally valued close relationships with foundation customers, who sign long-term supply contracts that enable companies to raise finance to build terminals.
But when Russia’s full-scale invasion of Ukraine in 2022 caused LNG prices to rocket, the company made a controversial decision to sell large amounts of product on spot markets, rather than honour long-term contracts. Shell, BP and several other foundation customers have filed arbitration claims worth $5bn against Venture Global, arguing it had reneged on long-term commitments to them to profit off the spot market.
The company, which operates two LNG terminals on the US Gulf coast, denies it broke any contracts.
Goldman Sachs, JPMorgan and Bank of America acted as joint bookrunners for Venture Global’s IPO.
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