IPO Preview: GasLog Partners LP

May. 7.14 | About: GasLog Partners (GLOP)

Summary

Growth-oriented limited partnership formed to own, operate and acquire liquefied natural gas carriers on 5-year charters.

Parent company GasLog has a market cap of $2.2 billion.

Existing shareholders indicated an interest in buying $60 million of the IPO, or 36% of the IPO.

Expects to pay an annualized dividend of 7.5% for year ending June '15, with an 11% overage of excess cash coverage.

Based in Gabian, Monaco, GasLog Partners LP (NYSE:GLOP) scheduled a $168 million IPO on the NYSE with a market capitalization of $196 million at a price range midpoint of $20 for Wednesday, May 7, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Citigroup, Credit Suisse, Wells Fargo Securities, Barclays, Evercore, UBS Investment Bank

Co-Managers: Deutsche Bank Securities, DNB Markets

End of lockup (180 days): Tuesday, November 4, 2014

End of 25-day quiet period: Monday, June 2, 2014

Summary
GLOP is a growth-oriented limited partnership formed to own, operate and acquire liquefied natural gas, or "LNG", carriers engaged in LNG transportation under long-term charters, which GLOP defines as charters of five full years or more.

The parent company GasLog (NYSE:GLOG) has a market cap of $2.2 billion.

Existing shareholders indicated an interest in buying $60 million of the IPO, or 36% of the IPO. In addition up to 5% is reserved for sale officers, directors and employees and related persons.

GLOP expects to pay an annualized dividend of 7.5% for year ending June '15, with an 11% overage of excess cash coverage, leaving little room for possible payout increases down the road.

Valuation

Glossary

2013 yr

March '15 yr

Cash available for distribution ($mm)

$23.7

$33.8

Cash required for minimum distribution

$38.1

$30.1

Projected cash overage

$3.7

% over/under

10.9%

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Valuation Ratios

Mrkt

Price /

Price /

% offered

Cap (MM)

BkVlue

TanBV

in IPO

GasLog Partners LP

$402

1.5

1.5

42%

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Conclusion
Positive on GLOP.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

GLOP is a growth-oriented limited partnership formed to own, operate and acquire liquefied natural gas, or "LNG", carriers engaged in LNG transportation under long-term charters, which GLOP defines as charters of five full years or more.

GLOP's initial fleet of three LNG carriers, which will have charter terms expiring in 2018 and 2019, will be contributed to GLOP by GasLog, which will control GLOP through its ownership of its general partner. GasLog was founded and is effectively controlled by its chairman, Peter G. Livanos, whose family's shipping activities commenced more than 100 years ago.

Upon the closing of this offering, GLOP will own three LNG carriers, built in 2013, with modern tri-fuel diesel electric propulsion technology that operate under long-term charters with subsidiaries of BG Group.

GLOP will also have options and other rights under which it may acquire additional LNG carriers from GasLog.

GLOP believes that such options and rights will provide it with significant built-in growth opportunities and allow it to diversify its fleet specification potentially to include steam-powered ships.

GLOP may also acquire vessels from shipyards or other owners. GLOP intends to operate its vessels under long-term charters with predictable cash flows and to grow its position in the LNG market through further acquisitions of LNG carriers from GasLog and third parties. GLOP believes it can grow its distributions per unit organically by providing reliable customer service to its charterers and leveraging GasLog's relationships, expertise and reputation. GLOP intends to make further acquisitions of LNG carriers from GasLog and third parties to grow its fleet. However, GLOP cannot assure you that it will make any particular acquisition or that as a consequence it will successfully grow the amount of its per unit distributions.

Dividend Policy

The amount of distributions GLOP pays on its common units that is treated as dividend income will depend upon the amount of its current and accumulated earnings and profits. GLOP will compute its earnings and profits for each taxable year in accordance with U.S. federal income tax principles. Based upon various assumptions and estimates regarding GLOP's expected earnings and profits, GLOP estimates that 70% of the total cash distributions received by a purchaser of common units in this offering that holds such common units through December 31, 2017 will constitute dividend income.

Competition

Competition in the LNG shipping market is principally for employment of ships whose charters are expiring and ships that are under construction. Competition for these charters is based on price, ship availability, size, age, propulsion technology and condition, relationships with LNG carrier charterers and the LNG safety record, experience and reputation of the operator. Due to the nature of competition and long-term charters, the LNG business provides operators with less volatile, more predictable revenue flows than some other sectors of the shipping industry.

5% stockholders

Post IPO the parent GasLog Ltd. will own 57% of GLOP.

Use of proceeds

GLOG expects to net $154 million from its IPO. Proceeds are allocated as follows:

  • prepay $82.6 million of borrowings under the $277 million senior secured loan facility related to the GasLog Sydney;
  • retain $35 million for general partnership purposes; and
  • make a payment of $36 million to GasLog as partial consideration for the interest in the subsidiaries that own the vessels in GLOP's initial fleet.

Disclaimer: This GLOP IPO report is based on a reading and analysis of GLOP's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.