Former BP plc CEO Tony Hayward, as well as former exploration chief Andy Inglis, have scored prominent positions in two energy firms.
Vallares plc, an energy fund vehicle backed by Hayward and a group of high-profile investors, in recent days has raised US$2.2 billion in an initial public offering, which is one-third more than the original target.
Vallares, to be based in London, is sponsored by Hayward as well as financiers Nathaniel Rothschild, Tom Daniel and Julian Metherell, who is the former UK CEO for Goldman Sachs Group Inc. The company plans to buy an emerging-market energy firm or an energy asset with an enterprise value of US$4.85-12.9 billion, the sponsors said. Hayward likely would be put in charge of any company that Vallares acquires, said Metherell.
“It is heartening to receive the backing of so many investors and to reach the fund-raising target so quickly,” Hayward said in a statement. “This demonstrates the confidence investors have in the strong fundamentals of the resources sector and our focus will now turn to searching for suitable acquisition opportunities.”
He told the Wall Street Journal on Friday “we’ve all been very encouraged by the support we’ve received…People look at the team that’s been assembled and [see] a very strong board…and a very good operational team with complementary skills.”
U.S. investors apparently were undeterred by Hayward’s negative image, and there was “no pushback at all” against his involvement in Vallares, Rothschild said on a conference call with reporters. “On both sides of the Atlantic, Tony was regarded as a very popular and extremely high-quality leader of BP.”
Half the money raised in the IPO came from U.S. funds, Metherell said.
After leaving BP in the wake of the Macondo well blowout in the Gulf of Mexico, Hayward said he had considered a career in private equity but decided the model was inappropriate for long-term oil and gas investments. Taking the helm of an already established energy firm also was a no-go. Instead, he decided to come aboard with Rothschild and his partners in the new venture.
Earlier this month Hayward said Vallares had a “pipeline of potential deals” but he did not identify specific targets. If Vallares fails to find a suitable transaction in the next two years, the cost of running the company would be covered by the founders’ equity, while other investors would receive most of their money back, Metherell said. The founders together invested about US$161 million in Vallares.
“From an investor point of view, they can see that we have significant skin in the game,” Metherell said. The founders would receive 6.67% of share capital once the first transaction is completed.
“If you believe that the trend is up for commodities, there are plenty of opportunities and Hayward surely knows about them,” wrote Standard & Poor’s equity analyst Christine Tiscareno. Vallares would “provide a stepping stone for an already successful exploration company to get into the market.”
The Vallares board of directors is to be chaired by Rodney Chase, former chairman of Petrofac plc, which is an oil and gas service infrastructure provider.
Coincidentally, Inglis, who resigned from BP after CEO Bob Dudley took over for Hayward last year, has been tapped to run Petrofac’s new integrated energy services (IES) division. Petrofac was started in Tyler, TX, 30 years ago but now does business worldwide. Inglis joined the firm in January; he had worked at BP for close to 30 years.
The IES unit brings together the company’s “solutions, energy developments and training services businesses,” and is focused on so-called “resource holders” or national oil companies that own small and medium-sized undeveloped fields. Unlike other service companies, IES provides not only services such as engineering and construction but, when appropriate, it also will provide capital.
“On a personal level, I am very excited by the opportunity to fundamentally change the way in which business is done in the upstream sector of the oil and gas industry,” said Inglis. “That’s a hugely exciting agenda and has the potential to create significant future growth.”
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