logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

IPO Report: Plains GP Holdings, L.P. (PAGP)

By  +Follow October 14, 2013 6:43PM
Share:
Tickers Mentioned:

Plains GP Holdings, L.P. (PAGP) is an Incentive Distribution Rights (see below) carve-out from the parent, Plains All American Pipeline, L.P (PAA), which has a $17.5 billion market cap.

Five IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

PAGP is based in Houston, Texas, Plains GP Holdings, L.P. (PAGP) scheduled a $3 billion IPO at a price range mid-point of $23.50, for Thursday, October 17, 2013.

The S-1 was filed October 7, 2013.  Manager, Joint Managers:  Barclays; Goldman;  J.P. Morgan; BofA Merrill; Citigroup; UBS;  Wells Fargo.   Co-Managers:  Baird; Oppenheimer; Stifel; BBVA; BNP PARIBAS; DNB Markets; ING; Mitsubishi UFJ;  Mizuho; Piper Jaffray; PNC; Scotiabank-Howard Weil; SMBC Nikko; SOCIETE GENERALE; SunTrust Robinson; BB&T; CIBC; Ladenburg Thalmann; Regions; Simmons; Stephens; Tudor

Summary

PAGP is an Incentive Distribution Rights (see below) carve-out from the parent, Plains All American Pipeline, L.P (PAA), which has a $17.5 billion market cap.

The yield on the parent PAA is currently 4.7%.  The projected yield for PAGP (the public portion of PAA’s Incentive Distribution Rights) is 2.5%, which will increase if PAA’s growth continues.

Valuation

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Dividend

12 months ended 6/13

Cap (mm)

Sls

Erngs

BkVlue

Yield

Plains GP Holdings, L.P. (PAGP)

$14,241

n/a

n/a

n/a

2.5%

Plains All American Pipeline, L.P. (PAA)

$17,500

0.4

10.7

19.4

4.7%

Glossary

Conclusion

The current rating on PAGP is positive.  PAPG is a big IPO and we don’t see much downside risk.  Because of expected Quantitative Easing from the Fed interest rates should stay low, which is a positive for PAPG.  As long as the market is stable at least, PAPG should be bought on the IPO, with moderate to low expectations.

Business

PAGP’s parent — Plains All American Pipeline, L.P. (PAA) with $17.5 billion market cap — is carving out its Incentive Distribution Rights (IDRs).  

Plains All American Pipeline, L.P. (Plains) is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids (NGL)

21% of the IDRs are being offered on the IPO, as Class A stock.  The only asset of PAGP is its 128 million shares of class A common stock in the Identive Distribution Rights vehicle, PAGP.

See organization chart here

Incentive distribution rights (IDRs)

IDRs are the risky frosting on the distribution cake  and only get paid if minimum distributions are exceeded by the parent: IDR payments are explicitly tied to distribution growth of the parent.

The yield on the parent PAA is currently 4.7%.  The projected yield for PAGP (the public portion of PAA’s Incentive Distribution Rights) is 2.5%, which will increase if PAA’s growth continues.

PAA’s IDRs and its indirect interest in PAA’s 2% general partner interest entitles PAGP’s stockholders to receive (through several corporate vehicles, see organziationchart)  without duplication:

    •15% of all cash distributed in a quarter after $0.2250 has been distributed in respect of each common unit of PAA for that quarter;

    •25% of all cash distributed in a quarter after $0.2475 has been distributed in respect of each common unit of PAA for that quarter; and

    •50% of all cash distributed in a quarter after $0.3375 has been distributed in respect of each common unit of PAA for that quarter.

PAGP owns 21% of the incentive distribution rights from the parent, PAA, through several corporate vehicles.

5% stockholder pre-IPO

“Existing Owners” refer to the entities and individuals that own capital interests in AAP and GP LLC  including, but not limited to, PAA Management, L.P. (“PAA Management”) and certain entities and individuals affiliated with Occidental Petroleum Corporation (“Oxy”), The Energy & Minerals Group (“EMG”), and Kayne Anderson Investment Management Inc (“Kayne Anderson”).

See organization chart here

Use of proceeds

PAGP will distribute the expected IPO proceeds of $2.9 billion to distribute to the Existing Owners, see above.

 

 


 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Liked What You Read? Join Equities.com and Connect With Your Favorite Financial Experts FOR FREE! Members of Equities.com gain access to our leading financial news and content, active social investment community, proprietary research tools including the 2014 Small-Cap Stars, E.V.A. reports and more.

Results for pagp
Market Compass
28 Aug 14 15:39:21
$PAGP: Plains GP Holdings Receives New Coverage from Analysts at Credit Suisse ... http://t.co/cbvATcIlHa http://t.co/IqRFYi07oU
chartseer
28 Aug 14 15:15:08
$PAGP http://t.co/PqyHOcewzE
WKRB News
28 Aug 14 04:41:47
Plains GP Holdings Coverage Initiated at Wunderlich $PAGP http://t.co/Gu5p4LDNFT
chartseer
27 Aug 14 16:52:23
$PAGP http://t.co/JGLS36mfCt
Seeking Alpha
27 Aug 14 15:01:33
General Partners Outperform Their MLPs http://t.co/sCTpxUe7QA $OKE $PAGP $SE $WMB
stt2318
27 Aug 14 10:18:40
$PAGP long setup http://t.co/RFWjfBwUE1
Stocks in News
27 Aug 14 05:39:23
$PAGP: Q2 2014 Plains GP Holdings LP Earnings Release - After Market Close http://t.co/WLYqgp5yd5 http://t.co/pn3NQQD3kC
Sleek Money
27 Aug 14 05:39:04
Plains GP Holdings Receives New Coverage from Analysts at Credit Suisse $PAGP http://t.co/KECJVJtU9L
Ticker Report
27 Aug 14 05:28:54
Wunderlich Begins Coverage on Plains GP Holdings $PAGP http://t.co/tZxIhCBuaG
FlashRatingsHOT
26 Aug 14 12:51:58
$PAGP has 2 analyst ratings today. Median target: $33. View here: https://t.co/8ECmn8hTII #PAGP
TipRanks
26 Aug 14 12:49:05
5-star analyst John Edwards from Credit Suisse initiated coverage on $PAGP with a HOLD. John has a 81.4% success rate http://t.co/Z9GQTPrruH
Mark Frey
26 Aug 14 07:11:38
Back from Jamaica, mon! Credit Suisse starts $PAGP at Neutral; Barclays starts $RIGP at Equal-weight; Morgan initiates $RIGP at Overweight.
US Banking News
26 Aug 14 07:04:46
Plains GP Holdings Earns Neutral Rating from Analysts at Wunderlich $PAGP http://t.co/pJhbKJ2wPT
Bulls vs Bears
26 Aug 14 06:39:19
$PAGP: Plains All American Pipeline, LP and Plains GP Holdings Report Second ... http://t.co/DT5Bz7VIUg http://t.co/Ibe1zT4dRF
InterCooler
26 Aug 14 06:21:03
Wunderlich Initiates Coverage on Plains GP Holdings $PAGP http://t.co/WFVnoAxarV
SIAnalystWire
26 Aug 14 06:11:34
Credit Suisse Starts Plains GP Holdings, L.P $PAGP at Neutral http://t.co/n0JETLofh1
US Consumer News
26 Aug 14 06:04:27
Plains GP Holdings LP initiated by Wunderlich at neutral. $33.00 PT. http://t.co/s7rnn2bcYX $PAGP #PAGP
Analyst Ratings
26 Aug 14 06:04:25
Plains GP Holdings LP initiated by Wunderlich at neutral. $33.00 PT. http://t.co/SAafhg6PIB $PAGP #PAGP
InterCooler
26 Aug 14 05:50:35
Plains GP Holdings Coverage Initiated at Credit Suisse $PAGP http://t.co/wnjD5zsKcc
Benzinga.com
26 Aug 14 05:42:24
UPDATE: Credit Suisse Initiates Coverage On Plains GP On Multiple Factors $PAGP http://t.co/S8EBGpFQBB #premarket
WKRB News
26 Aug 14 05:34:41
Credit Suisse Begins Coverage on Plains GP Holdings $PAGP http://t.co/zE6YVaEVe0
US Banking News
26 Aug 14 05:11:55
Plains GP Holdings Earns Neutral Rating from Analysts at Credit Suisse $PAGP http://t.co/Tz6LLNfwyj
Market News
26 Aug 14 04:39:15
$PAGP: News Buzz-Plains GP Holdings LP (NYSE:PAGP), Diana Shipping Inc. (NYSE ... http://t.co/DDUaPlW5TN http://t.co/52ZLpzZ1WK
Analyst Ratings
26 Aug 14 04:35:03
Plains GP Holdings LP initiated by Credit Suisse at neutral. http://t.co/dDuJDS0Qem $PAGP #PAGP
US Consumer News
26 Aug 14 04:34:52
Plains GP Holdings LP initiated by Credit Suisse at neutral. http://t.co/g3WEmzwKga $PAGP #PAGP
				
				
By  +Follow October 14, 2013 6:43PM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.