HRT Taps Petrobras Equity Gap

Brazilian E&P company HRT Participacoes has raised BRL2.62bn in an IPO. It takes advantage of demand from Brazilian oil investors looking to diversify away from Petrobras, whose stock has dipped since its $70bn September capital raise. “This sector is at a very important moment, but the question of Petrobras has been very negative” says a Rio-based portfolio manager looking at the deal. “There should be some sizeable flows moving into other names in the sector.” HRT priced 2.18m units at BRL1,200, the midpoint of its BRL1,050-BRL1,350 range. The total includes a 243,000 share (15%) greenshoe and 324,000 share (20%) hot issue. The base deal was heard about 5x subscribed, boosted by large anchor orders. Investors apparently weighed the greenfield risk of HRT’s projects against the expertise of management, which includes ex-Petrobras officials. The issuer is raising funds to develop blocks in Brazil and Africa won since entering E&P last year. According to the prospectus, 75% of proceeds from the IPO will go toward exploration in Brazil’s Solimoes basin, 15% for exploration of offshore blocks in Namibia, 2% to explore in other Brazilian blocks and 8% for other projects. HRT was founded in 2004 as an oil services company, IPEX, by a group of former Petrobras and ANP executives, moving into E&P in 2009. HRT held 2 private share sales in 2009 to raise BRL479m, according to regulatory documents. It counts MSD Capital, Perella Weinberg Capital and Senator Investment among shareholders. Credit Suisse was global coordinator, with Citi and Goldman Sachs as bookrunners. Australia’s Karoon Petroleo e Gas should be the next IPO from the sector, with launch heard likely within a week.