Gateway sets terms for HK listing
Gateway Energy & Resource Holdings, an investment fund managed by the Asian arm of United States private equity firm EIG Global Energy Partners, is aiming to raise up to US$200 million via a Hong Kong listing.
Set up in 2007 by EIG, which manages US$9.2 billion of assets under various funds, Gateway is listed on GSTrUE - a private exchange for institutional investors managed by Goldman Sachs. Through the Hong Kong share offer, Gateway would roughly double its net asset value, which stood at US$187 million on September 30.
Gateway is offering 13 million new shares at HK$117 to HK$120 each, representing a 4 to 6.4 per cent discount to its net asset value of HK$125 at the end of last year, said a person with direct knowledge of the deal, which is arranged by Citi, Morgan Stanley and BOC International. The shares are due to be priced today.
Under local listing regulations, as an investment company Gateway's shares may be sold only to professional investors, but retail investors will be able to trade in the shares via the exchange after its expected listing debut on March 30, subject to the condition that the minimum size of each trade is HK$500,000.
Gateway's funds are invested in five managed funds and four direct investments, which in turn have investments in 70 firms and projects in more than 20 nations. The funds are either invested in EIG-managed funds or co-invested with EIG in other energy and resources projects.
Gateway's listing allows investors not big enough to qualify to invest in EIG to get exposure to its investments, which include unconventional energy projects such as the exploration and production of oil and gas trapped under deep-sea floors in Brazil, and within onshore sedimentary rock formations in the US.
Exploitation of such hard-to-extract energy resources has become economical in recent years due to rising oil prices and new technology.
Gateway has provided investors with an average annual dividend yield of 8.1 per cent on its net asset value since inception. It aims to pay dividends twice a year, totalling 6 to 8 per cent of its net asset value on an annual basis, according to presentation materials sent to would-be investors. It is targeting total return on its investments of 14 to 16 per cent.
At the end of September last year, some 39 per cent of its investment was in oil and gas exploration and production, 26 per cent in oil and gas logistics facilities projects, 21 per cent in the electricity sector, and the rest in renewable energy, mining, infrastructure and transportation.
Just over 80 per cent of its assets were invested in fixed-income instruments, including 16 per cent in investment-grade corporate bonds, 29 per cent in subordinated debt, 15 per cent in preferred shares, and 23 per cent in high-yield company bonds. The rest are in common shares.
It had 61 per cent of its investments in North America, 24 per cent in Latin and Central America, 11 per cent in Europe, and the rest in Africa and the Middle East. But the Hong Kong listing did not mean it would shift its investment focus to Asia, the person said.
Rather, Hong Kong was chosen as a fund-raising venue because it provides access to a wide range of deep-pocketed investors, and the Hong Kong dollar's peg to the US dollar eliminates foreign exchange risk.
Gateway also considered moving its listing venue from GSTrUE to Singapore or Australia before opting for Hong Kong, the person said.
The amount of natural gas, in cubic feet, that can be extracted daily from the sea floor in Brazilian waters by specialised ships such as BW Pioneer