STX OSV To IPO at $0.79 per share

It is always funny how an European shipbuilder comes here to raise cash. I am guessing that Oslo may have too many people aware of the situation that is going on, given there proximity to the North Sea vessel market.

As you can read from the newspapers, the shipbuilder intends to raise $257.3 million by selling and placing out shares at $0.79 a piece. I always look at IPOs with disdain. STX OSV is no exception because it is priced at slight more than 2 times its NAV (even after IPO). Moreover, the vessel market really peaked last 2 years. So what we can see here is that earnings that have come in may be exceptional, and that there still is a supply glut. The latter means that newbuild orders will be fewer or postponed, until the excess vessels can be taken off the market.

About STX OSV (More here)
 

We are one of the major global designers and shipbuilders of offshore and specialized vessels used in the offshore oil and gas exploration and production and oil services industries. Headquartered in Norway with approximately 9,000 employees worldwide as at June 30, 2010, we operate nine strategically located shipbuilding facilities,including fi ve in Norway, two in Romania, one in Brazil and one in Vietnam. Our technological know-how and innovation coupled with our global operations ensure access to the fastest growing oil exploration markets. Our core business is the design and construction of complex and highly customized offshore and specialized vessels including platform supply vessels (“PSV”), anchor handling tug supply vessels (“AHTS”) and advanced offshore subsea construction vessels (“OSCV”). In addition, we operate a design subsidiary which develops commercialized designs with high market acceptance by our customers, including the most commonly used design for PSVs of more than 4,500 deadweight tons (“DWT”)1. Our expertise and track record in constructing complex and highly customized offshore and specialized vessels have earned us recognition from industry players, including our customers. We have built strong relationships with our customers including companies that operate under the brand names of DOF, Farstad Shipping, AP Møller- Maersk, Island Offshore, Solstad Offshore, “K” Line Offshore, Petroleum Geo-Services, Aker Oilfi eld Services and Rem Offshore. According to RS Platou, as of August 31, 2010, we have approximately 30.8% market share of AHTSs of more than 20,000 brake horsepower (“BHP”), approximately 18.0% market share of PSVs above 4,500 DWT, and a market share of approximately 6.6% for selected types of OSCVs2.