Silver Run Acquisition Corp. (SRAQU.O), a U.S. investment vehicle, raised a greater-than-expected $450 million in an initial public offering on Tuesday aimed at funding the acquisition of energy companies, indicating investors see bargains amid the oil price rout.
The shares of many energy companies have been battered in the last 18 months as an oil supply glut has weighed on their prospects. Silver Run's IPO shows that some investors believe the sector's corporate valuations have reached bottom.
In the largest IPO so far this year, Silver Run priced 45 million shares at $10 each, selling 5 million more shares than it originally planned, a person familiar with the matter said on Tuesday, asking not to be identified because the pricing is not yet public.
Silver Run did not immediately respond to a request for comment.
Silver Run is a blank-check acquisition company sponsored by energy-focused private equity firm Riverstone Holdings LLC. Such so-called special-purpose acquisition companies fund the equity portion of their acquisitions through stock issuance.
Silver Run will look for companies that are "fundamentally sound" but underperforming due to current commodity prices, according to its IPO prospectus.
Silver Run's chief executive officer, Mark Papa, is an oil and gas veteran and Riverstone partner. He served as CEO of EOG Resources Inc., one of the largest independent oil and gas companies, for 15 years.
Shares in Silver Run are expected to start trading on Wednesday and list on NASDAQ under the symbol SRAQU.
Deutsche Bank Securities, Citigroup and Goldman, Sachs & Co were underwriters on the offering.