Former BP chief executive Tony Hayward and financier Nat Rothschild are among the high profile heavyweights behind plans to raise £1bn and float Vallares - a venture focused on the oil and gas sector.
Announcing their plans for the flotation, the founders said Vallares will use funds raised “to acquire or establish a major company, business or asset that has significant operations in the resources sector, with a focus on the oil and gas sector”.
The experience and skills of the founders will be used to “identify and generate acquisition opportunities, structure and execute an acquisition and to enhance the value of the acquired business”.
The Vallares placing will be priced at £10 per share and the order book is expected to close in less than two weeks, on 20 June.
As well as Hayward and Rothschild, the founding directors include investment manager Tom Daniel, who was involved in the highly successful IPO of Vallar PLC; and Julian Metherell, former chief executive of Goldman Sachs' UK investment banking business. Rodney Chase, who recently retired from the position as non-executive chairman of Petrofac, has been appointed independent chairman.
The directors believe Vallares has a number of advantages which make it well placed to compete with other participants in the resources sector. For instance, through Nathaniel Rothschild and Tony Hayward, in particular, it will have a global network of relationships with key decision-makers and owners of potential targets in the resources sector.
They are also keen to point out that the structure of Vallares is based on the proven model of Vallar which raised £707 million in July 2010 in an IPO. Within 10 months it had acquired a world-class coal business in Indonesia.
Tony Hayward said: "Vallar is a proven success and it is clear that the concept applies equally well in the oil and gas sector. Many high quality international resource assets have been acquired by family owned or private companies in the last few years. We will have the cash, access to funds and the capability to unlock value where the current owners have neither the capital nor technical expertise to develop the assets."
Vallares intends to target a major company, business or asset valued between £3 billion and £8 billion, although an opportunity with a smaller or larger value may be considered. It aims to achieve this through identifying and acquiring interests in companies, businesses or assets where the existing owners are attracted to the Vallares proposition: the opportunity “to hold an ownership interest in a London listed company with a high quality board and the cash, access to capital and capability to unlock the value of their assets”.
The venture plans to focus mainly on emerging and under-developed geographic regions including Russia, the CIS region, the Middle East, Africa, Asia and Latin America.
The founders predict a bright future for the company, noting that increasing global industrialisation and urbanisation, particularly in Asia and the emerging markets, is likely to lead to increased global demand for commodities. At the same time, however, they believe that the supply of oil and gas will be constrained by insufficient investment to keep pace with this demand and by exploration and development challenges. This supply-demand dynamic is likely to generate sustained inflation in commodity prices.
Hayward and his colleagues also argue that in recent years many valuable resource assets have been acquired by smaller companies that often do not have access to capital or sufficient capability to realise their development potential. Accordingly, they reckon that the resources sector, and especially the oil & gas industry, presents multiple attractive investment opportunities.
In total the founders of Vallares have committed £100m of capital to the company, including £80m to subscribe for shares in the placing.