Lord Browne returns to stock market as Riverstone unveils £1.5bn IPO

  • @BawdenTom

Lord Browne of Madingley, the former BP chief executive, is to return to the London Stock Exchange after his latest venture, the private equity firm Riverstone, announced plans to raise up to £1.5bn by listing a new energy vehicle in the City.

Riverstone specialises in energy investments and is best known as the principal backer of Cuadrilla, the UK's most prominent fracking company whose oil exploration activities in the West Sussex village of Balcombe have met with high-profile protests. Cuadrilla was also behind the fracking that was blamed for earth tremors in the Blackpool area in 2011.

Lord Browne, who ran BP between 1995 and 2007 and left after lying in court about his relationship with a man, is a partner at Riverstone and will be a board director of the listed vehicle, Riverstone Energy Ltd (REL). He is also the chairman of Cuadrilla.

The new company, whose shares are expected to start trading on 29 October, will invest across the global energy industry, focusing on exploration and production, according to the announcement.

REL is raising £550m through a placing with five "cornerstone" investors including McNair Group, owned by Robert McNair, who also owns the Houston Texans NFL team. KFI, a private investment vehicle of Louis Bacon, the founder of Moore Capital Management, and the privately owned Hunt Oil are also investors.

The flotation, which is being co-ordinated by Goldman Sachs and JP Morgan Cazenove, is part of a trend in which private equity firms use public markets to access fresh capital from retail investors.

KKR, the legendary US leveraged buyout specialist, is in the process of setting up two mutual funds investing in various types of debt.

Sir Robert Wilson, the chairman of REL, said: "Riverstone Energy Ltd presents a unique opportunity for public market investors to gain exposure to the energy sector via Riverstone."

Lord Browne has been a partner of Riverstone since leaving BP six years ago. Apart from chairing Cuadrilla, in which Riverstone has a 44 per cent stake, he co-heads the world's largest renewable energy fund, with $3.5bn in equity.

But Riverstone is much better known for its involvement in fracking – the controversial practice which releases oil and gas from shale by blasting a mixture of chemicals, water and sand into the rock. Cuadrilla is at the forefront of Britain's fledgling fracking industry, the future of which is still highly uncertain but which investors hope could be the country's next boom industry. However, it is facing widespread opposition on concerns that it can cause earth tremors and pollute the water supply.

Lord Browne also chairs the Tate Gallery board of trustees and serves on several advisory boards. He is an adviser to Mikhail Fridman, the Russian oligarch who was a partner to BP in its TNK-BP joint venture.

Since Riverstone was founded in 2000 it has raised about $25bn of cash through seven private investment funds. It has committed more than $20bn to about 100 investments in North and South America, Europe, Africa and Asia.

Over the summer, Riverstone agreed to pay the US producer Apache Corp $3.75bn (£2.33bn) for its oil and gas field assets in the Gulf of Mexico.