Units in Shell Midstream Partners LP, the U.S. pipeline operator of Royal Dutch Shell plc , will begin trading Wednesday, Oct. 29, following a $920 million initial public offering that increased in both size and value amid strong demand. Shell Midstream said late Tuesday it had sold 40 million common units, up from a planned 37.5 million, at $23 each, above the maximum indicative price of $21 per unit. A further 6 million units could be sold if the underwriting banks exercise their option to buy stock in the IPO. The IPO values Shell Midstream Partners's equity at $3.17 billion and will leave the company 29% owned by new limited partners, or 33.4% if the underwriters exercise their option in full. London-listed Shell will hold the remaining stake. Shell is the first large oil and gas producer to spin U.S. pipeline assets off into a master limited partnership, a legal structure that is exempt from corporate taxes but which has to distribute almost all earnings to stockholders. The pipeline-partnership mix has proved popular with investors who view it as a safe play on U.S. oil and are attracted by the steady income generation in the low interest rate environment. Shell Midstream, which is based in Houston, owns stakes in the operators of four pipelines in Texas and Louisiana. Its biggest asset is a 43% stake in Zydeco Pipeline Co. LLC, which operates a Houston-to-Houma crude oil pipe that is expected to contribute about 62% of Midstream's operating profit. Shell Midstream made pro forma Ebitda of $47 million for the first half of this year. The company will begin trading on the New York Stock Exchange on Wednesday morning under the symbol . Barclays plc and Citigroup Inc. are managing and underwriting the sale. Shell took legal counsel from a Baker Botts LLP team including partners Kelly Rose, Hillary Holmes, A.J. Ericksen, Josh Davidson, James Chenoweth, Mike Bresson and Jared Meier. Vinson & Elkins LLP provided legal advice to the underwriters.
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