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The initial public offering (“IPO”) of Plains All American Pipeline, L.P.’s (PAA - Analyst Report) unit Plains GP Holdings LP hit a new mark, raising a total of $2.82 billion. The IPO by Plains GP Holdings is the largest this year in the U.S., outpacing Pfizer Inc.’s (PFE - Analyst Report) animal health unit Zoetis Inc.’s (ZTS) offering of $2.24 billion.

Plains GP Holdings announced that it has priced its IPO of 128 million Class A shares at $22.00 per share. In Jul 2013, the partnership had filed the IPO application with the U.S. Securities and Exchange Commission. Initially, the partnership intended to issue 128 million Class A shares in the price band of $22.00 - $25.00 per share. The unit’s Class A common stock will start trading on the New York Stock Exchange from Oct 16, 2013 under the symbol “PAGP". Plains GP Holdings will act as a corporation for the U.S. federal income tax related issues.

Per the filing, the partnership will allow the underwriters of the issue a window of 30 days to purchase up to an additional 19.2 million shares of the Class A common stock of the IPO to cover over-allotments, if any.

Later, the shareholders of Plains GP Holdings will hold the right to obtain a part of the earnings from Plains All American Pipeline in terms of quarterly cash distribution. Initially, the shareholders are expected to receive 14.9 cents per share as quarterly distribution.

Plains GP Holdings intends to utilize the net proceeds from this offering to make distributions to the existing shareholders, and acquire a stake in the partnership owned by Occidental Petroleum Corporation (OXY - Analyst Report) and Energy & Minerals Group. Currently, Plains All American Pipeline’s long-term debt-to-capitalization ratio is 45.9%. Post offering, the partnership’s long-term debt-to-capitalization ratio will decline.

The newly formed entity will hold limited partner interests in Plains AAP, L.P., which owns a 2% general partner stake in Plains All American Pipeline.

The current transaction will help both the entities to allocate their assets and restructure existing resources as per their priorities. We believe this deal will subsequently enable both the partnerships to concentrate on their strategic preferences while identifying capacity for future growth.

Houston, Texas-based Plains All American Pipeline is engaged in transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products in North America. The partnership currently has a Zacks Rank #3 (Hold).

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