Viva floats at lower end of price range

VIVA Energy will start life on the stock market as a $4.86 billion company with owner Vitol retaining a 45 per cent stake in the fuel retailer.

Shares in Viva, Australia’s biggest float since health insurer Medibank was privatised four years ago, have been priced at $2.50, the bottom end of a price range initially sought.

Viva, which supplies Coles Express petrol stations and owns a refinery in Geelong, will start life as an ASX 100 company tomorrow but trade at an earnings discount to key rival Caltex.

Owner Vitol Investment Partnership, an investor group headed by Swiss-based energy trading giant Vitol, has raised $2.65 billion by selling 55 per cent of a group of assets it bought from Shell in 2014.

Float managers Merrill Lynch, Deutsche Bank and UBS closed the book build yesterday.

Morningstar says “there is a lot to like about the Viva business” but warns its relationship with supermarket giant Coles and the rise of electric vehicles loom as risks.

Viva had provided a price range of $2.50 to $2.65 to potential investors.

The final price of the float will have Viva trade at 6.5 times its underlying earnings before interest, tax, depreciation and amortisation.

Key rival Caltex trades at about 7.5 times earnings.