initial public offerings (IPOs) trading on American exchanges

Friday, October 10, 2014

Dave and Buster's (PLAY) began trading on the NASDAQ on 10 October 2014

Dave & Buster’s Entertainment Inc. (PLAY), which operates a chain with games and food aimed at adults, surged in early trading after raising $94 million in its initial public offering.

Dave & Buster’s increased 11 percent to $17.79 as of 11:37 a.m. in New York, giving the company a market value of $696 million. The Dallas-based chain, seeking to repay debt, sold 5.88 million shares for $16 each, according to a statement yesterday, after offering them for $16 to $18 apiece.

The company joins a number casual-dining companies that have tapped the public markets over the past year. El Pollo Loco Holdings Inc., a chicken restaurant, and Mediterranean-themed Zoe’s Kitchen Inc. (ZOES) completed IPOs this year and have more than doubled since their debuts.

Dave & Buster’s began after David “Dave” Corriveau, who ran an entertainment venue, teamed up with James “Buster” Corley, who had a restaurant next door in Little Rock, Arkansas, according to Dave & Buster’s website. The two decided to combine their concepts under one roof, opening their first store in Dallas in 1982.

From 1997 to 2006, Dave & Buster’s operated as a public company until it was acquired by Wellspring Capital Management LLC and HBK Main Street Investors LP. Stephen King, 56, has been the chief executive officer since 2006.

2011 IPO

Oak Hill Capital Partners LP purchased Dave & Buster’s in 2010 and filed for an IPO in July 2011, eventually withdrawing the plan the following year, citing market conditions. Oak Hill sought to sell the company earlier this year at a valuation of about $1 billion, drawing interest from Apollo Global Management LLC, people familiar with the matter said in March. Oak Hill didn’t sell shares in the IPO and will own 81 percent after the offering, regulatory filings show.

Oak Hill, the private-equity firm backed by Texas investor Robert M. Bass, bought Dave & Buster’s in 2010 for $570 million including debt. The firm committed about 96 percent of the deal’s $245.5 million of equity funding, according to filings. Less than a year after the buyout, Dave & Buster’s bought back $95 million of Oak Hill’s shares.

At the $16 offering price, Oak Hill would have an unrealized gain on its investment of at least 145 percent.

Dave & Buster’s posted $635.6 million in revenue in the year through Feb. 2, a 4.5 percent gain from the previous year, filings show. A little less than half of that amount was derived from food and beverage sales, while the rest came from entertainment, according to the prospectus.

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