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Grocery Outlet goes shopping for a listing
Posted on Tuesday, 11 June 2019 07:18
Grocery Outlet Holding could have a capitalisation of as much as USD 1.50 billion on admission to Nasdaq after setting a price range that values its upcoming initial public offering (IPO) at USD 296.48 million to USD 336.01 million. The California company, which is a retailer of name-brand consumables and fresh products sold through a network of independently operated stores, is selling 17.19 million shares at USD 15.00 and USD 17.00 apiece. It has provided its 12 underwriters, which includes Bank of America Merrill Lynch and Morgan Stanley, with a 2.58 million overallotment option. Following the IPO, Hellman & Friedman will continue to beneficially own a majority stake of 61.9 per cent, based on the green shoe being exercised in full. Established in 1946 by Jim Read, Grocery Outlet has a flexible buying model that allows entrepreneurial independent operators to run its stores and sell products at prices 40.0 per cent to 70.0 per cent lower than conventional retailers. Berkshire Partners acquired an undisclosed majority interest in the company in 2009 and subsequently sold this stake to Hellman & Friedman in 2014. At the time, the incoming backer ended up with about 80.0 per cent, while management and the founding family retained 20.0 per cent. Over the intervening five years, store count has increased from 237 to 316, as of 29th December 2018, which represents a compound annual growth rate (CAGR) of 10.1 per cent. Sales for the same timeframe have advanced at a CAGR of 12.0 per cent from USD 1.60 billion to USD 2.30 billion, while net profit has risen from USD 4.80 million to USD 15.90 million, or a CAGR of 49.3 per cent. The IPO will be one of the 20 largest targeting a company based in the US so far this calendar year, according to Zephyr, the M&A database published by Bureau van Dijk. Along with highly-anticipated listings by the likes of Uber, Lyft and Pinterest, there have been debuts or proposed floats by numerous special purpose acquisition vehicles, online platforms and biotechnology players, among others. © Zephus Ltd