Encana Corp. has boosted the price and offering size of its soon-to-be spun-off royalty unit to as much as $1.46-billion, a 70 per cent increase from the top of its initial range, putting it among Canada's most valuable IPOs.
The deal has ballooned as interest in Encana's PrairieSky Royalty Ltd. unit has increased with the company's marketing efforts and amid an overall rebound in investor demand for Canadian energy shares following a weak 2013.
Encana, which is looking to raise cash from the sale of a minority stake and still benefit from the unit's income, said the shares will now be priced between $26.50 and $28 apiece. This is up from the previous range of $23 to $26.50.
In addition, it now expects to sell 52 million shares in the much-anticipated IPO, up from 32.5 million, the company said. The offering is scheduled to close by the end of this month.
It previously pegged its top estimate for proceeds at $860-million.
The top end of the new range would put the value of the issue above Athabasca Oil Corp.'s $1.35-billion initial public offering in 2010. It would be the largest Canadian IPO since Sun Life Financial Inc.'s $1.8-billion float in 2000, according to Bloomberg.
Encana, the country's biggest natural gas producer, is spinning off the unit as part of a larger strategy to concentrate its resources on fewer assets around the continent, and its shares have gained ground in the process.
PrairieSky comprises Encana's mineral fee title land, covering 5.2 million acres in Alberta. The company does not pay the government royalties from resources extracted on the assets, because they are part of an 1880s land grant from Ottawa to Canadian Pacific Railway. CP once owned one of Encana's predecessors, PanCanadian Energy.
PrairieSky is designed to collect royalties and fees from other energy companies operating on the land, then distribute a large amount of that to its own shareholders.
TD Securities Inc. and CIBC World Markets Inc. are the joint book runners for the transaction.
Encana shares were up 15 cents at $24.98 on the Toronto Stock Exchange on Wednesday, representing a 30 per cent gain this year.