Navigator Holdings Spikes Out Of The Gate

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Navigator Holdings Ltd. (NYSE:NVGS) is a company that owns and operates a fleet of liquefied gas carriers and is backed by billionaire investor Wilbur Ross. The company launched its IPO this morning and the stock has become a popular trade, with share prices rising by as much as 11 percent to $21.12 per share. This is $1.12 higher than its IPO price of $19.00 per share.

The company initially planned to offer 11.3 million shares in the $17-$19 range. However, the actual IPO figures were 12 million shares priced at the top end of the projected price range. The shares come from both Navigator itself and some of its private investors. Navigator is offering approximately 9 million of the shares, while other stockholders make up the remaining 3 million shares. Navigator will not be receiving any of the proceeds of shares sold by private stockholders.

Those stockholders involved with selling the shares are also allowing the underwriters a 30 day option to purchase an additional 18 million shares.

The company was able to raise $228 million in investor backing from the IPO, leaving a net profit of approximately $156.4 million. This money will be used to fund about $72.7 million in payments due for purchase agreements involving new vessels to be delivered in 2015. The rest of the proceeds will be used in general corporate expenses.

With the largest fleet of handysize tankers in the world, Navigator Holdings has a corner on the market in shipping liquefied gas across the sea. These tankers are capable of transporting liquefied petroleum gas (LPG), petrochemical gasses, and ammonia among other type of liquefied gas. Each ship has a deadweight of 50,000 tons, the vessels are in direct competition with companies like Stealth Gas Inc. and Exmar NV which is based in Belgium.

Wilbur Ross acquired a majority holding in Navigator when Lehman Bros. Inc. filed bankruptcy. Lehman Bros. was the former owner of the company, and Ross saw an opportunity to snap up a potential gold mine.

The stock offering is expected to close on Tuesday, however, the 30 day option will remain open from the private investors to the underwriters to purchase additional shares.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.