Cheniere Energy Partners LP Holdings LLC (CQH), a Delaware LLC that will own 55% of Cheniere Energy Partners (CQP) and intends to engage in no other business, plans to raise $600 million in its upcoming IPO on Friday, December 13th.
The Houston, Texas-based firm will offer 30.0 million shares at an expected price range of $19.00-$21.00 per share. If the IPO can hit the midpoint of that range at $20 per share, CQH will command a market value of $4.6 billion. See S-1
CQH filed on September 20, 2013.
Lead Underwriters: Credit Suisse Securities, Goldman Sachs, Morgan Stanley, RBC Capital Markets. Underwriters: Banca IMI SpA, Barclays Capital, Citigroup Global Markets , HSBC Securities, J.P. Morgan Securities, Mitsubishi UFJ Securities, Mizuho Securities, Scotia Capital Markets, SG Americas Securities, and SMBC Nikko Securities America.
CQH has been formed to hold the Cheniere Partners limited partner interests that are owned by Cheniere so that the firm can separate its relatively low risk, cash flow generating assets from its higher risk, early stage projects. CQP is a limited partnership formed by Cheniere to own and operate regasification facilities at the Sabine Pass LNG terminal, which includes five LNG storage tanks with a capacity of approximately 16.9 Bcfe and two docks that can accommodate vessels with capacity of up to 265,000 cubic meters.
CQP receives stable income flows through long-term agreements with Total (TOT) and Chevron (CVX), which pay some $250 million per year for the use of the terminal. CQH will own 11,963,488 common units of CQP along with 135,383,383 subordinated units (which are not entitled to receive distributions until all common units have received as least the initial distribution).
The firm will pay dividends to its shareholders based on the cash it receives from the quarterly distributions paid by CQP, which may consist of $0.425 per common unit ($1.70 annualized). CQP has paid these dividends each quarter since 2007.
CQH offers the following financial data on CQP in its S-1 balance sheet for the nine months ending September 30, 2013:
Net Loss: ($196,851,000)
Total Assets: $7,570,718,000
Total Liabilities: $5,844,955,000
Stockholders' Equity: $1,725,763,000
CQH's own financials are of limited use at this point, since the business will be fundamentally altered by its IPO. CQH's potential is better indicated by CQP's financials at this point, since the holding firm's successes and failures will essentially reflect those of CQP.
President and CEO Charif Souki is a co-founder, Chairman, CEO and President of Cheniere. Mr. Souki has over 20 years of independent investment banking experience in the oil and gas industry. Mr. Souki is also a director, Chairman of the Board and the CEO of Cheniere Partners' general partner. He holds a B.A. from Colgate University and an M.B.A. from Columbia University.
We rate this energy IPO a buy for income oriented investors in the proposed $19 to $21 price range. Our expectation is that the deal will come in at the low or mid point of the range.
CQH is precisely what it claims to be: a relatively low-yield but extremely stable investment. Shares are unlikely to gain or lose much value over time, since the firm has no intent of altering its resources in the future, and will simply continue to collect funds from CQP and redistribute them to shareholders.