Kinder Morgan Upsizes IPO

Private equity-backed pipeline company Kinder Morgan priced its initial public offering above the expected range, Reuters reported, raising about $2.86 billion in the largest U.S. energy initial public offering since 1998. Kinder Morgan sold 95.5 million shares for $30 each in a deal that values the company at more than $21 billion, Reuters wrote. Kinder Morgan is backed by the Carlyle Group and Goldman Sachs‘s buyout fund.

(Reuters) – Pipeline company Kinder Morgan Inc sold more shares and priced them above the expected range, an underwriter said on Thursday, raising about $2.86 billion in the largest U.S. energy initial public offering since 1998.

Kinder Morgan sold 95.5 million shares for $30 each in a deal that values the company at more than $21 billion.

Backed by private-equity investors including Carlyle Group [CYL.UL] and Goldman Sachs Group Inc’s (GS.N) buyout fund, Kinder Morgan upsized its IPO from the original plan to sell 80 million shares for $26 to $29 each.

The upsizing — following an above-range pricing by Nielsen (NLSN.N) — is a good sign for private equity firms looking to begin the process of selling portfolio companies bought during the height of the buyout boom of 2005 to 2007.

Hospital operator HCA, which hopes to raise up to $4.6 billion and retailer Toys R Us [TOY.UL], which hopes to raise up to $800 million, are also expected to come public in the United States this year.

Kinder Morgan, which originally filed to raise up to $1.5 billion, is the biggest U.S. energy IPO since Conoco’s $4.4 billion offering in 1998, according to Thomson Reuters data.

The IPO is seen not just as a means for Kinder’s private equity partners to monetize their investment, but also a chance for investors to access its vast network of pipelines spanning the United States and stretching 2,500 miles into Canada.

In the United States, the company owns 15,000 miles of natural gas pipelines and 8,400 miles of refined petroleum product pipelines running gasoline, diesel fuel, jet fuel and natural gas liquids. It also has 120 fuel terminals, gas storage facilities, carbon dioxide pipelines and stakes in eight West Texas oil fields.

Pipeline investments could increase as power plants begin burning more natural gas instead of coal, as new shale gas sources are developed, or even to feed the need for facilities to export U.S. gas at cheaper prices. [ID:nN10211966]

Pricier crude could also lead to a greater need for more oil storage, as well as pipeline capacity for the output of quickly expanding projects in the Canadian oil sands.

By Alina Selyukh