Fairfield Energy Cancels IPO

LONDON (Reuters) – British oil and gas firm Fairfield Energy has shelved plans for a $500 million stock market listing, the company said on Thursday, after weak markets spooked potential investors.


“In the light of market conditions, (Fairfield) has decided against proceeding with its initial public offering of shares and listing on the main market of the London Stock Exchange at this time,” the company said.


Fairfield, controlled by private equity companies led by Warburg Pincus [WP.UL], had offered shares at 220-420 pence, valuing the firm at up to $1.1 billion.


The lack of demand for Fairfield bodes ill for the IPO market as its shares were offered at a discount to the company’s peers at the lower end of the range.


The range valued the shares at between 0.55 and 0.7 times net asset value (NAV). Rival EnQuest (ENQ.L) trades at around 0.8 times NAV.


The next major British IPO, due next week and likely to be the last before the summer hiatus, is online grocer Ocado which has been criticised by many analysts and fund managers for an aggressive valuation.[ID:nLDE66C24J]


A spokesperson for Ocado insisted on Thursday the listing is proceeding as planned.


“The Ocado team have had a great reception in the United States and are continuing with a busy roadshow schedule during which the management team are meeting a very large number of potential investors,” the spokesperson said.


Fairfield announced plans to float and raise up to $500 million last month, with the proceeds to be spent on boosting production from its North Sea oil fields, exploration and possible acquisitions. [ID:nLDE65G073]


Goldman Sachs (GS.N) and Credit Suisse (CSGN.VX) were joint global co-ordinators on the deal.


Books closed on the sale at around 1530 GMT on Wednesday after which the company’s board met to decide on how to proceed.


“They just weren’t prepared to sell it cheap,” a source close to the company told Reuters on Thursday.


Fairfield’s troubles contrast with the successful listing this week of German advertising group Stroeer SAXG.DE which priced in the middle of its price range in a 394 million euro IPO, trading higher on its debut on Thursday.


The deal, run by a syndicate of banks led by JP Morgan and Morgan Stanley saw U.S. private equity group Cerberus [CBS.UL] sell its whole stake in the company for around 83 million euros.


A source close to the Stroeer transaction said investors are scrutinising the balance sheets and management of individual companies rather than deciding to invest according to sector or whether the deal involves a private equity sale.


British IPOs have achieved mixed results this year, with investors driving a hard bargain before buying into new listings.


Airline ticketing firm Travelport and fashion chain New Look also abandoned flotations this year.


Successful listings this year include fund manager Jupiter JUP.L which priced at the lower end of its guidance, and Essar Energy (ESSR.L) which cut the offer price on its IPO in April amid fickle demand.

By Chris Vellacott
(Additional reporting by Mark Potter; Editing by Hans Peters)