Newly incorporated 1947 Oil & Gas is aiming to join AIM later this month with an expected market capitalisation of £65m, most of which it will use to fund an acquisition, in what is nevertheless a welcome new addition to FTSE's junior market.

The company plans to raise £50m from institutional and other investors through the issue of 500 million new shares at 10 pence each.

Proceeds will be used primarily to finance the its previously agreed conditional acquisition of Renaissance Offshore, providing 1947 Oil & Gas with an immediate portfolio of producing assets in the Gulf of America.

The new company has been created specifically to acquire, operate and grow a portfolio of producing oil and gas assets in the US, including the shallow-water Gulf of America, which it believes are undervalued.

In effect, 1947 is less a traditional IPO and more an acquisition-led listing, using the public markets to buy an operating business and create a platform for further M&A. The company's conditional acquisition of Renaissance Offshore, which is expected to complete upon admission, includes interests in 11 producing fields and is intended to provide a cash-generative platform for future growth through acquisitions rather than a traditional exploration-led strategy.

1947 said it has also completed an oversubscribed pre-IPO fundraising that raised approximately £7.2m, with proceeds from both fundraisings earmarked primarily for the $65m acquisition, as well as working capital and listing-related expenses.

The IPO is led by a high-profile management team including former Talos Energy CEO Tim Duncan, former Goldman Sachs commodities research chief Jeff Currie and Cove Energy co-founder Ivan Murphy.

The proposed flotation comes on the same day that the Financial Conduct Authority (FCA) introduced new measures designed to streamline the UK's IPO process. It also gives a welcome new addition to AIM, which is in need of a boost. With a valuation of £65m, 1947 would sit towards the lower end of the market by value, below a substantial middle tier of corporate entities.

Management is pitching the transaction as an opportunity to acquire producing assets at a significant discount to their underlying value.

The company believes the mature shallow-water Gulf of America assets remain materially undervalued despite their cash flow generation and sees scope to pursue a broader consolidation strategy across the sector.

Murphy, co-president & co-founder of 1947, said: "A listing on London’s AIM market and the capital access this provides will enable 1947 to capitalise on our strong pipeline of producing, cash-generative shallow-water assets in one of the most productive and geopolitically secure offshore basins globally. The scale of opportunity in combination with our proven operational capability and our disciplined acquisition strategy positions 1947 to deliver sustainable growth and attractive long-term returns for our shareholders."

Duncan, who serves as executive chairman of 1947, added: “We believe that conventional, mature assets in the Gulf of America represent compelling value opportunities in the US energy sector today. The company’s first acquisition of Renaissance Offshore LLC provides 1947 with immediate and oil-weighted cash flows, giving us a strong foundation from which we can scale production significantly to pursue our broader growth objectives.”

The new entity also intends to introduce a progressive dividend policy, targeting its first interim dividend following its half-year results to 30 June 2027, supported by cash generation from its producing asset base.

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