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MRC Global IPO – An Energy Industry Supply Play


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Details Regarding the MRC Global IPO

MRC Global IPOHouston, Texasbased MRC Global, Inc. sold shares to the public on April 11, 2012, completing the MRC Global IPO by selling 22.73 million shares of common stock at $21.00 per share.  MRC Global IPO shares started trading on the New York Stock Exchange (NYSE) during April 12, 2012 via symbol “MRC”.

MRC Global is an energy industry valve, pipe, and fittings supply company that is majority owned by a Goldman Sachs holding company called PVF Holdings.  MRC Global sold 17.05 million shares during the MRC Global IPO, which netted the company approximately $258 million, after expenses.  MRC Global intends to use the net proceeds from the Forum Energy Technologies IPO to repay debt associated with a revolving credit facility.  Goldman Sachs’ holding company, PVF Holdings, maintains a majority ownership of MRC Global after the MRC Global IPO, with holdings of over 77% of MRC Global common shares.

The main underwriters for the MRC Global IPO were Goldman Sachs and Barclays.  Bank of America Merrill Lynch, Wells Fargo Securities, and Baird were lead managers for the MRC Global IPO.

Upon completion of the MRC Global IPO, MRC Global has a market capitalization of approximately $1.7 Billion, which means MRC Global is a small-cap company.  If MRC Global can grow its market capitalization to a level above $2 Billion, it will be categorized as a mid-cap company.

Why The MRC Global IPO May Be A Good Investment

While MRC Global is not directly involved in the fast growing crude oil and natural gas exploration and production segments of the energy sector, MRC Global is well positioned to take advantage of the 13% annual growth rate in the oil and natural gas exploration and production sectors.  MRC Global provides the valves, pipes, and fittings that crude oil and natural gas explorers and producers need to keep their equipment running.  MRC Global also supplies valves, pipes, and fittings to the broader energy sector of the economy, including pipelines, petroleum and natural gas distribution centers, and refineries.  While this broader exposure to the energy sector may lessen MRC Global’s growth rate, it also provides more even revenues and customer orders than companies that rely on the more volatile exploration and production segments of the energy sector.

According to the MRC Global IPO filings, the company’s revenue increased 26 percent in 2011 to $4.8 billion, and the company recorded a profit of $29.0 million, which was a big improvement over the $51.8 million loss reported by MRC Global in 2010.  Investing in the MRC Global IPO carries with it the typical risks associated with general economic slowdown that could reduce orders, revenue, and potentially profits, and the ongoing competition from competitors in the energy valve, pipe, and fitting supply business.

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