Duet Group (DUE)has completed its $100 million placement to fund its deal with Chevron Australia to build, own and operate the domestic gas pipeline for the Chevron-operated Wheatstone project.
The placement was oversubscribed with a price of $2.06 per new stapled security, which is two cents below Duet's last close at $2.08 on Friday. 48.5 million securities were issued.
Duet anticipates the Wheatstone Ashburton West Pipeline project to cost $94.9 million and be completed by December 2014, generating distributable cash of $13 million by 2015.
UBS was the underwriter for the placement, which is unusual given Duet's close relationship with Macquarie.
Duet Group upgraded to "buy" at Morgan Stanley
Elsewhere, Morgan Stanley lifted its recommendation on Duet to "buy" from "neutral", finding an internal rate of return of around 13% from the project that is accreditive to its valuation.
The investment bank sees a total return of 21% for Duet's shareholders in the next year, with its price target on the stock upped to $2.30 from $2.25.
There are three key reasons to own the stock, according to the bank: sector-leading dividend yield at around 8%, a solid balance sheet, and currently a good opportunity to buy given Duet has underperformed the S&P/ASX 200 by 6% over the last month.
Duet's share price bounced 3.6% to $2.15 at AEST compared to a 0.23% rise from the S&P/ASX 200.