Oil Startup IPO Gains Momentum

OGX, the oil and gas exploration startup owned by Eike Batista, could raise up to BRL6.45bn ($3.85bn) with a June 11 IPO, according to a local filing. The first big Brazilian IPO of the year was initially expected to raise around $2bn. But the new higher amount could be achieved if the offer prices at the midpoint of a targeted BRL883-BRL1,131 range, and if the company also exercises a greenshoe. OGX aims to take on Petrobras in the booming Brazilian oil business after winning seven exploration blocks off the country’s coastline. The sale, kept out of reach of retail by an elevated price, is led by UBS Pactual, with Credit Suisse and Itau BBA as joint bookrunners. Aside from Batista, whose Centennial Asset Mining Fund controls 73% of OGX, chief shareholders include Ontario Teachers’ Pension Plan, Ziff Brothers, UBS Prestige and Morgan Stanley. Batista was in New York last week and has embarked on a roadshow to sell the deal, being shown to the buyside through the first week of June. The offer marks only the second true IPO of the year for Brazil, a weak showing for a country that boasted some of the highest IPO volume in the world last year. Bankers away from the transaction are hopeful investors will warm up to this liquid offer from a hot sector, which may also pave the way for others waiting in the wings.