(Adds details on impact of asset sales)
By Greg Roumeliotis
Sept 4 Oil and gas company EP Energy Corp filed
for an initial public offering on Wednesday, potentially marking
a fast exit after it was taken private by Apollo Global
Management LLC in the largest private equity deal of
Private equity firms buy companies and typically hold them
for a period of three to five years before they try to sell them
at a profit. An IPO filing so soon after the buyout signifies
Apollo's desire to quickly monetize EP Energy's value.
It also highlights the appetite of investors for companies
in the sector, with vast reserves of natural gas and oil
unlocked from underground shale deposits driving an energy
renaissance in the United States.
Reuters reported in June that Apollo was working with
investment banks to prepare EP Energy for an IPO that could
value it at more than $8 billion.
An Apollo-led group, which includes Riverstone Holdings LLC,
Access Industries Inc and Korea National Oil Corp, completed the
$7.15 billion acquisition of EP Energy - originally El Paso
Corp's exploration and production arm - in May 2012. That deal
helped finance Kinder Morgan Inc's $21.1 billion
acquisition of El Paso Corp.
Earlier this year, EP Energy struck deals to sell off some
of its natural gas and coal bed methane properties for $1.3
billion. The company said it would use the proceeds to pay down
some of its debt and increase its capital expenditure.
In July EP Energy also agreed to sell its Brazil operations,
and in August it paid its owners a $200 million dividend.
The asset sales have made EP Energy a more oil-focused
company, with assets in Texas' Eagle Ford and Wolfcamp shales,
as well as Utah's Uinta basin. It also held onto its highest
return natural gas asset in the Haynesville shale.
EP Energy said last month its oil production in the second
quarter of 2013 was up 59 percent from a year ago and that it
was hoping for higher profit margins following the asset sales.
To be sure, an IPO of EP Energy this year does not
necessarily mean a quick flip of the company. The speed of
private equity's cashing out depends on the state of the company
itself as well as market conditions.
Car rental company Hertz Global Holdings, for
example, was taken public by Carlyle Group LP, Clayton
Dubilier & Rice LLC and Merrill Lynch Private Equity 11 months
after they bought it in December 2005 for $15 billion. It wasn't
until last May that the buyout firms sold their remaining shares
in Hertz, making 2.6 times their investors' money.
The $316 million IPO of another Apollo-backed oil and gas
company - Athlon Energy Inc - was received warmly by
stock market investors last month. Athlon shares rose as much as
34 percent on its first day of trading and are up 38 percent
since the IPO.
EP Energy filed to raise up to $100 million in an IPO. The
amount of money a company says it plans to raise in its first
IPO filing is a placeholder used to calculate registration fees.
The final size of the IPO could be different.
EP Energy's filing with the U.S. Securities and Exchange
Commission on Wednesday did not reveal how many shares the
company planned to sell or their expected price.
The company plans to list its common stock on the New York
Stock Exchange under the symbol "EPE".
(Reporting by Greg Roumeliotis in New York; Additional
reporting by Aman Shah in Bangalore; Editing by Andrew Hay and