Hi-Crush Partners lines up for $225 million IPO
NEW YORK (MarketWatch) -- Hi-Crush Partners LP, a producer of sand used in hydraulic fracturing to extract oil and gas, plans to raise about $225 million in its initial public offering this week.
The firm plans to offer 11.25 million common units at an estimated price of $19 to $21 each for trading on the New York Stock Exchange under the symbol HCLP.
In a note to clients, Scott Sweet of IPO Boutique said that the IPO is expected to debut on Thursday. He's forecasting the offering will price at the low end of its range.
Avista Capital Partners, a private equity firm, is the lead investor of Hi-Crush Proppants LLC, the sponsor of Hi-Crush Partners.
The firm expects to pay a minimum quarterly distribution of 47.5 cents per common unit and subordinated unit to investors.
Based in Houston, Texas, Hi-Crush describes itself as a pure play, low-cost, domestic producer of premium monocrystalline sand, a mineral that is used as a "proppant" to improve production of oil and natural-gas wells.
Hi-Crush operates a 561-acre facility near Wyeville, Wis., that produces about 1.6 million tons of fracking sand, or proppant, per year.
In the prospectus for its IPO, Hi-Crush said demand for proppant has increased at an average annual rate of 28% from 2006 to 2011, with total annual sales of $3.7 billion in 2011, according to data provided to the firm by The Freedonia Group, a research firm.
"We believe that the market for raw frac sand will continue to grow based on the expected long-term development of North America's unconventional oil and natural gas reservoirs," the company said.
Hi-Crush Partners rang up $22 million in adjusted net income and revenue of $34 million in the six months ended June 30. In the year ended 2011, Hi-Crush posted $12 million in net income and $20 million in revenue.