Dave & Buster’s is offering 5.9m primary shares at US$16-$18 for US$106.2m of proceeds. The deal represents 15% of outstanding and values the company at up to US$703.8m. Jefferies and Piper Jaffray are leading the offering, which is expected to price October 9 after a standard domestic roadshow. Goldman Sachs had been lead left on the earlier failed IPO effort in 2012, but is not involved on this occasion.
In the intervening period, Dave & Buster’s, founded in 1982, has increased its store numbers to 70 from 59 and upped revenues to US$635.6m from US$541.5m, though total debt has increased to US$528.7m from US$464.8m.
In July, Dave & Buster’s completed a refinancing that included a new US$530m and a US$50m revolving credit facility. After the IPO (proceeds will be used to reduce debt), debt will fall to US$439m or 3.3x adjusted Ebitda of US$134.8m for the fiscal year ended February 2, 2014.
The company is controlled by private equity firm Oak Hill Capital Partners, which purchased it from Wellspring Capital Partners and HBK Main Street Investors in mid-2010 for an aggregate value (enterprise value) of US$570m.
The October 2012 IPO effort saw Dave & Buster’s set terms and launch the roadshow for a $107.8m all-primary IPO (similar in size to the current deal) with Goldman Sachs, Jefferies and Piper Jaffray leading the offering. That deal represented 28% of outstanding and valued Dave & Buster’s equity at US$379.4m, but was ultimately withdrawn with the company citing prevailing market conditions.
Equity markets conditions have become more difficult in recent weeks but many IPOs are on the road and in the pipeline and most have still succeeded in pricing. Dave & Buster’s is also bringing its IPO on the back of strong comp store sales growth in the latest period, the 26 weeks ended August 3. In this period, comp store sales grew 5.2% versus just 0.5% in the same period last year. Store-level Ebitda margins and adjusted Ebitda margins have also consistently improved since 2010, rising to 27.6% and 23.7% respectively.
The company plans to list on Nasdaq under the symbol “PLAY”.
Underwriters have reserved 2.5% of the deal for the LOYAL3 platform, enabling small investors to invest as little as US$100.
