Venture Global LNG (VG.N) will debut on public markets on Friday after sharply lowering its IPO valuation to $60.5 billion, but still set to be one of the largest U.S.-listed energy companies.
The LNG exporter cut its valuation by 40% from $110 billion after investors and analysts termed it 'lofty', on doubts over its estimated long-term profit from liquefying gas for export and ongoing legal battles.
It sold 70 million shares to raise $1.75 billion on Thursday, selling the stock at $25 compared to its offer price of $23 to $27. This was a far cry from its initial plan to raise as much as $2.3 billion by selling at $40 to $46.
The market debut will serve as the first big test for energy companies under an administration led by President Donald Trump, who has prioritized increasing U.S. energy output and rolling back his predecessor's climate policies.
"A less talked about issue of the deal is the extremely low float... which is highly unusual and presents a significant risk factor due to overhang down the road," said Josef Schuster, CEO of IPO-focused investment indexes, IPOX.
Venture Global began generating revenue in 2022 when its first facility, Calcasieu Pass, started producing superchilled gas.
But it is yet to be commissioned due to contract disputes with customers such as BP (BP.L), Shell (SHEL.L) and Edison (EDNn.MI) over non-receipt of cargoes due to lengthy testing and optimizing process before commercial operation.
Venture Global has said since the Calcasieu facility was still in the commissioning phase, the company is not yet obliged to fulfill the long-term contracts.
"Venture operates in a complex business that might appeal to a smaller subset of investors than some large IPOs," said Nicholas Einhorn, director of research at IPO-focused Renaissance Capital.
Global LNG demand has risen in recent years amid a shift toward cleaner energy, with the U.S. emerging as a major supplier to both European and Asian countries.
After his inauguration earlier this week, Trump issued an order to resume processing export permit applications for new LNG projects.
"We will drill baby, drill," he said, outlining a plan to maximize U.S. oil and gas production by declaring a national energy emergency, removing excessive regulations and withdrawing the U.S. from a global climate change agreement.
A reduced IPO valuation of $60.5 billion still puts Venture Global in the league of top U.S. energy companies, dwarfing high-profile names such as Occidental Petroleum (OXY.N), Marathon Petroleum (MPC.N), and Schlumberger (SLB.N).
The company's stock will trade on the New York Stock Exchange.
LARGEST LNG IPO IN HISTORY
Venture Global's share sale marks the biggest IPO ever by an LNG company globally, according to Dealogic data. It is the third-largest energy and utility sector listing in the U.S. since 1995.
"The high market cap reflects the company's ambitious development plans," Einhorn of Renaissance Capital said. "The company will definitely need to raise more capital over time, both equity and debt, to finance its growth plans."
If the stock does well at debut, it will handily surpass rival Cheniere Energy (LNG.N), the world's largest LNG exporter that commands a valuation of $52.4 billion on the NYSE.
In addition to Cheniere, Venture Global competes with Freeport LNG, TotalEnergies, Chevron, ExxonMobil, Petronas, among others for a share of the lucrative market.
Rising commodity prices and optimism for pro-energy sector policies under the new Republican administration are also expected to drive a recovery in energy sector IPOs in 2025. The capital-intensive sector was among the slowest in U.S. IPO activity last year.
There were only six energy sector IPOs in 2024, raising nearly $800 million—a small fraction of the broader market where 150 companies collectively raised $29.6 billion, according to data from Renaissance Capital.
"For energy and LNG companies, as we are seeing with Venture Global, achieving those very high premiums at IPO is proving more challenging, particularly when measured against established public market peers," said Schuster of IPOX.
