Goldman Sachs and private equity firm Carlyle Group were forced to lower the price for the initial public offering of Cobalt International Energy, an oil explorer with no profits or revenue after failing to convince investors to pay up for Cobalt's tangible net assets. Last week, the firms said they hoped to raise $1.1 billion from the IPO.
Goldman (GS), Carlyle and three other firms involved in the deal had hoped to price Cobalt shares between $15 to $17, but the IPO was priced at $13.50 a share. Cobalt's shares will begin trading on Wednesday on the New York Stock Exchange under the ticker ''CIE.''
The IPO will net Cobalt proceeds of $850 million, but that could rise to $978.1 million if underwriters exercise an option to buy an additional 9.45 million. Cobalt, founded in 2005, will use the proceeds to fund drilling projects.
While the $850 million may be disappointing to Goldman, Carlyle and their fellow investors, it is still impressive considering that Cobalt has generated no revenue from projects in the Gulf of Mexico, Angola and Gabon and does not expect to do so until 2012 at the earliest. One analyst called Cobalt ''high risk,'' but noted investors are still interested in the story, though apparently at a lower price.
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