Tallgrass Energy GP LP (NYSE:TEGP) has opened its IPO of 35.3 million, class A shares, with the underwriters being allowed to purchase additional 5.3 million shares. The company expects to raise $900 million through the IPO. It is expected that the shares would be sold at $24-$27 a share.
In the past year, the company has generated $371.6 million in revenues, with $51.8 million in income. Citigroup and Goldman Sachs are serving as underwriters for the IPO. Tallgrass Energy concentrates on interstate gas transmission. The company also holds indirect interests in Tallgrass Energy Partners. Tallgrass Energy GP LP and its partners provide natural gas transportation services in the Mid West and Rocky Mountain regions. The company also operates a crude oil transportation service in Wyoming and surrounding areas.
Initial reports from the first IPO reported that the shares were traded for $29 apiece, much higher than expected. By May 6, the company had sold 41.5 million shares and raised $1.2 billion. This was excluding the overallotment option for underwriters. Investors have been showing great interest in TEGP, which although being an MLP company, has a much simpler structure. Additionally, the company is involved in the oil and gas business, which has been taking a toll due to falling prices.
TEGP follows an Up-C structure, which has a number of features, one being the avoiding of the complicated K-1 tax form. Additionally, it means that distributions paid to shareholders would be treated as return of capital. The company dividends would also increase with increase in distribution of Tallgrass Energy Partners. However, a fall in the distribution amongst the partners would mean a loss for the investors of Tallgrass Energy GP LP. The trading on NYSE is expected to begin soon.
Tallgrass Energy GP LP (NYSE:TEGP) has filed for being listed on the New York stock exchange, after holding its first IPO. The company has a market capital of $4.99 billion. TEGP was last traded at $31.75 after a rise of 9.48%.