Warburg Pincus float 13 times over-subscribed

Warburg Pincus’ Oslo flotation of emgs, a Norwegian seabed exploration company, has met with an enthusiastic response from the market.

Emgs, a portfolio company of private equity group Warburg Pincus, priced at the top of its range and then opened up a further 11 percent on its stock market debut in Oslo today, giving it an implied capitalisation of about NOK 11 billion (€1.4 billion).

Emgs priced at the very top of its NOK 125-135 range – which was itself a revision of the original NOK 100-125 range – and then opened up a further 11 percent at NOK 150 as investors clamoured to buy the stock. The offering was 13 times oversubscribed, the company said.

Warburg Pincus, a long-time investor in the oil and gas sector, is now in line for a substantial return from the seabed exploration company, which it first backed with venture funding in 2004.

The buyout firm, which tends to take a relatively long-term approach to its investments, is not using the flotation as an exit route; it will retain a 60 percent control stake, which it cannot sell for at least six months. 

Emgs provides technology that enables the detection of hydrocarbons beneath the seabed for oil and gas companies prior to drilling. The patented technology is 90 percent accurate, according to the company.

Since its inception in 2002, emgs has conducted more than 200 commercial surveys for numerous oil and gas companies, including BP, Chevron, Statoil and Petronas.

Terje Eidesmo, chief executive of emgs, said: “We are delighted with the success of our IPO, and the overwhelming response we have received from investors. We believe that we now have a solid foundation to continue to grow emgs as a public company and to lead the rapid development of the industry”.

In 2006, emgs recorded revenues of $118 million (€89 million), an increase of 67% from 2005. Operating profit was $13.2 million (€11 million) and earnings before tax was $20.7 million (€16 million).

Warburg Pincus and emgs management acquired the company from Statoil, the Norwegian state oil company, as an early stage venture investment in 2004.

Warburg has invested over $2 billion (€1.5 billion) in 30 energy companies globally, including MEG Energy, Coaltek, and Petrotec Biodiesel in Europe.