The limited partnerships (LPs) are Lehigh Gas Partners LP (LGP – proposed) and MPLX LP (MPLX – proposed). The household-name product distributor is WhiteWave Foods (WWAV – proposed).
High Yields with a Pop
The records show that one of today’s “hot” IPO sectors is the LPs. Their appeal boils down to two simple words: high yields. Consider the last three LPs to go public:
- Seadrill Partners (SDLP) priced its IPO of 8.75 million common units at $22 each on Oct. 18, 2012, and closed on Friday, Oct. 19, at $24.37 – UP 10.8 percent from its initial offering price. Seadrill plans an annual cash distribution of $1.55 per unit to yield 7 percent, based on its issue price.
- Summit Midstream Partners, LP (SMLP) priced its IPO of 12.5 million common units at $20 each on Sept. 27 and closed on Friday at $20.66 – UP 3.3 percent from its initial offering price. Summit plans an annual cash distribution of $1.60 per unit to yield 8 percent, based on its issue price.
- Susser Petroleum Partners LP (SUSP) priced its IPO of 9.5 million common units at $20.50 each on Sept. 19. The IPO closed on Friday at $22.91 – UP 22.5 percent from its initial offering price. Susser plans an annual cash distribution of $1.75 per unit to yield 8.5 percent, based on its issue price.
Step Up on the Gas
This brings us to this week’s IPO calendar. Gasoline figures prominently in the two high-yield limited partnership IPOs on tap.
Lehigh Gas Partners plans to price 6 million common units at $19 to $21 each. The IPO is expected to start trading Friday morning on the New York Stock Exchange under the proposed symbol “LGP.” The lead manager is Raymond James. The co-managers are Baird, Oppenheimer, Janney Montgomery Scott and Wunderlich Securities.
Based in Allentown, Pennsylvania, Lehigh Gas is a limited partnership formed to engage in the wholesale distribution of motor fuels – namely gasoline and diesel fuel. The partnership was also created to own and lease real estate used in the retail distribution of motor fuels.
Lehigh Gap plans an annual cash distribution of $1.75 per unit to yield 8.75 percent, based on the mid-point of its proposed price range.
MPLX LP plans to price 15 million common units at $19 to $21 each. The IPO is expected to start trading on Friday morning on the New York Stock Exchange under the proposed symbol “MPLX.” The joint-lead managers are UBS Investment Bank, BofA Merrill Lynch, Morgan Stanley, Citigroup and J.P. Morgan. The co-managers are Barclays, Deutsche Bank Securities and Wells Fargo Securities.
Based in Findlay, Ohio, MPLX LP is a limited partnership recently formed by Marathon Petroleum Corp. to own, operate, develop and acquire crude oil, refined product and other hydrocarbon-based product pipelines and other midstream assets in the Midwest and the Gulf Coast area. MPLX will also own a butane cavern in West Virginia.
MPLX plans an annual cash distribution of $1.05 per unit to yield 5.25 percent, based on the mid-point of its proposed price range.
Smooth as Soy
WhiteWave Foods plans to price 20 million shares of Class A Common Stock at $14 to $16 each. The IPO is expected to start trading on Friday morning on the New York Stock Exchange under the proposed symbol “WWAV.” The joint-lead managers are J.P. Morgan, Credit Suisse and BofA Merrill Lynch. The co-managers are Morgan Stanley, Barclays, Wells Fargo Securities, Credit Agricole CIB and SunTrust Robinson Humphrey.
Based in Dallas, WhiteWave is a distributor of Silk Soymilk plant-based foods and beverages, International Delight and LAND O LAKES coffee creamers and beverages, and Horizon Organic premium dairy products. In Europe, the company distributes brands of plant-based foods and beverages, including vegan staples Alpro and Provamel. The company was formed in 1977. It has about 2,500 employees.
WhiteWave plans to sell all the shares in the offering. It expects to have about 20 million shares of Class A Common Stock and about 150 million shares of Class B Common Stock outstanding after the offering.
Note: The WhiteWave offering is what is known as a “carve-out.” Before the completion of this offering, the company was a wholly owned subsidiary of Dean Foods (DF). After the offering, Dean Foods will own all of the Class B Common Stock and have about 98.7 percent of the voting power.
Nevertheless, the deal is said to be “the pick of the week” by the IPO handicappers.
That brings us to the following week, when the Nov. 6 election will dominate the news.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.