GasLog sinks on debut, rising LNG demand offers hope

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(Global Markets) - Shares of liquefied natural gas (LNG) carrier operator GasLog Ltd (GLOG.N) fell 12 percent in their market debut but rising LNG exports make the company a good bet.

On Thursday, the company priced its initial public offering of 23.5 million shares at $14 apiece. The Monaco-based company had expected to offer the shares priced $16 to $18 apiece.

As shale development increases domestic production and pushes natural gas prices way below global levels, U.S. producers are making moves to export LNG â€" a natural gas cooled to become a liquid so it can be shipped.

Buyers across the world are also lining up to buy the cheap American fuel.

LNG is one of the few profitable sectors in the shipping industry, large parts of which are struggling with oversupply and weak freight rates.

Freight rates for LNG are expected to stay elevated at least through 2014, shipping insiders said.

After its first day of trade, the company is valued at about $778.9 million.

GasLog plans to use the proceeds from the offering to make installment payments on its eight new LNG carrier construction contracts.

The company, which is controlled by Greek shipping magnate Peter Livanos, said it intends to pay a quarterly dividend of 11 cents per share commencing in the fourth quarter of 2012.

For 2011, GasLog posted a profit of $13.7 million on revenue of $66.5 million â€" 99 percent of which came from BG Group.

"Their big year is going to start in 2013 ... dividends look stable based on contracts but they are too far for investors to look. In the longer term, it will work for patient investors," said Francis Gaskins, a partner at IPODesktop.com.

Goldman Sachs, Citigroup, J.P. Morgan and UBS are lead underwriters to the offering.

Shares of the company closed at $12.40 on Friday on the New York Stock Exchange.

(Reporting by Tanya Agrawal, Ashutosh Pandey and Divya Lad in Bangalore; Editing by Supriya Kurane and Joyjeet Das)