TriWest Capital-backed Source Energy revises IPO to raise $175 mln

Source Energy Services, a proppant-sourcing and oilfield-logistics company, revised its recently filed initial public offering to raise $175 million.

Source, backed by Canadian private equity firm TriWest Capital Partners, updated its prospectus to sell common shares at $10.50 apiece, down from a prior range of $17 to $20 per unit.

The change follows Source’s postponement of its public sale last month due to “adverse capital market conditions,” created by a drop in oil prices.

The repriced IPO is expected to raise more than $200 million, once its greenshoe option is exercised, and value the Calgary fracturing-sand producer at more than $500 million.

Source, which posted 2016 sales of $139 million, will list on the Toronto Stock Exchange under the symbol SHLE. The lead underwriters are Scotia Capital, Morgan Stanley Canada and BMO Nesbitt Burns.

All the proceeds will go to the company. They will be used to pay for Source’s acquisition of a new facility near Blair, Wisconsin, reduce debt, and support other capital expenditures.

The IPO previously included a secondary sale by TriWest, which invested in Source in 2013. Upon its completion, TriWest will remain a minority investor, holding a 31 percent stake, according to the updated prospectus.

Cody Church, a senior managing director at TriWest, told PE Hub Canada the results of Source’s IPO “will create a great platform for the company’s strategy, including some $125 million for growth initiatives.”

Church chairs the company, while Jeff Belford, a TriWest senior managing director, is a board member.

TriWest raised $500 million for its fifth mid-market fund in 2015. Since then, TriWest Capital Partners Fund V has made five platform investments, including Trimlite, a maker of doors and other building materials, acquired in late 2016.

Church said Fund V is now 25 percent invested.

Reuters this week reported on the resurgence of Canada IPO market’s in the first quarter. A key contributor was private-equity-backed offerings, including Canada Goose Holdings Inc‘s listing on the Toronto exchange.

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