Linn Energy LLC (LINE) developed LinnCo LLC (LNCO) to access capital in order to satiate its appetite for growth, and has piqued investor interest in LinnCo as the company is trading at a tighter yield than Linn Energy, says Christopher P. Sighinolfi, Director at UBS Investment Bank.
“What we have seen most recently is LINN‘s development of LinnCo (LNCO), which was really centered on that question of getting enhanced access to capital. LINN had successfully done three overnight transactions at about $0.75 billion, but their appetite for growth was larger than their ability to finance allowed,” Sighinolfi said.
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Investor interest has risen in LinnCo, as its development has allowed Linn Energy to have a currency that is palatable to institutional investors and opens up their capital access beyond retail networks to institutions and foreign owners, and also to those within the retail network that wish to own LINE in a tax-advantaged account, says Sighinolfi.
“If you were to look at it, LinnCo trades at a yield that is tighter than LINN Energy, so it’s further enhanced the company’s cost of equity as well as allowing it broader access to capital,” Sighinolfi said.