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Israel-backed Ithaca Energy set for London’s biggest IPO in 2022

REUTERS/Dado Ruvic
Ithaca is expected to make its market debut on November 9 in a rare sign of life in Europe's stock market floatations

Ithaca Energy’s plans to launch an initial public offering (IPO) on the London Stock Exchange next week could value the North Sea oil and gas producer at up to 3.1 billion pounds, making it London’s largest IPO this year.

Shares in the company – owned by Tel Aviv-listed Delek Group – are being offered at 250 to 310 pence a share, implying a market value of 2.5 billion to 3.1 billion pounds ($2.87 billion to $3.56 billion), bookrunners on the deal said on Wednesday.

Ithaca, which produced about 66,700 barrels of oil equivalent per day (boed) in the first half of the year, is expected to make its market debut on November 9 in a rare sign of life in Europe’s IPO market, where activity has plummeted since the outbreak of the war between Russia and Ukraine.

Proceeds from European share sales and other equity capital markets deals in the region have dropped 82 percent to $8 billion in the third quarter of the year amid a global economic slowdown and febrile markets.

In September, Porsche’s €75 billion market debut in Frankfurt became Europe’s largest IPO this year while the London Stock Exchange has only seen a handful of minor deals including the flotation of New Energy One Acquisition Corp in March, a blank-cheque company backed by Eni and Livestream LLC.

As Europe grapples with the energy crisis, there is renewed interest in the North Sea region, with Britain recently launching its first oil and gas exploration licensing round since 2019 in an effort to boost domestic production.

Investors are focused on Ithaca’s dividend yield, with the price range corresponding to a dividend yield of 11.3-14 percent for 2023, a bookrunner involved said.

Ithaca, which competes with Var Energi, Aker BP , Harbour Energy and Energean, expects to be eligible for inclusion in the FTSE UK indices.

The company is aiming for a slim free-float of 12 percent, making use of a change to listing requirements implemented last year by the London Stock Exchange that reduced the amount of shares an issuer is required to have in public hands from 25 percent to 10 percent.

Goldman Sachs and Morgan Stanley are joint global co-ordinators on the deal while HSBC, Jefferies and Bank of America are joint bookrunners, with ING acting as co-lead manager.