QGOG Readies Debut

Brazil’s Queiroz Galvao Oleo e Gas (QGOG) is set to price its IPO today, targeting at least $600m in the SEC-registered sale. Books were heard covered Wednesday. In a test of investor appetite for stocks in the broader Brazilian oil chain, the drill rig operator of the Queiroz Galvao conglomerate is offering 31.6m primary shares, assuming a 15% greenshoe, at $19.00-$21.00, meaning a $632m transaction if done at the midpoint. QGOG is raising funds to make down payments for two ultra-deepwater drillships, and raise capital for new and existing projects. JPMorgan, Bank of America Merrill Lynch, and Itau are global coordinators, along with Credit Suisse and Bradesco as joint bookrunners and Jefferies, DNB, Banco do Brasil, BNP Paribas and ING as co-managers. The QGOG Constellation unit is 80% controlled by QGOG International Sarl, a vehicle owned by members of the Queiroz Galvao family. The issuer is hoping a Luxembourg registration and a US listing attract global energy investors as well as the LatAm and EM-focused buysides that have been finicky in the last two years. Brazil has not seen an oil sector issuer since QGOG’s sister unit Queiroz Galvao Exploracao e Producao made its public equity debut in February 2011, raising just over $900m-equivalent. Seabras Servicos de Petroleo was another looking in 2012 that shied away.