Advent Making 5.3x its Investment in Five Below

Advent International’s investment in Five Below has grown more than five-fold in two years.

The Philadelphia discount retailer announced a secondary offering of 7 million shares Tuesday. Most of the stock is coming from Advent, which is selling about 5.6 million shares, according to a Jan. 15 regulatory filing. At $31.48, the proposed maximum offering price, Advent could realize about $176.3 million from the sale.

The secondary sale will reduce Advent’s stake in Five Below to about 21.3 million shares, or 39.4%, from 26.8 million or 49.7%. LLR Capital is also selling a small chunk, about 400,000 shares. LLR’s stake will fall to 6.9% from 7.6%.

Five Below, which sells “extreme value merchandise” like soccer balls or sandals for $5 or less, went public in July at $17 a share. The offering surged nealry 56% its first day.

On Wednesday, the retailer’s stock gained $2.57, or 8.07%, to $34.40 in afternoon trading.

Advent acquired a majority stake in Five Below in October 2010. The PE firm invested $192.9 million of equity in the deal, while the Sargent Family put in $1.1 million, regulatory filings say.

Advent has already received back more than half of the money it provided. In May, Five Below paid out a “special dividend” of about $99.5 million, SEC filings say. LLR received $9.5 million, while Advent got about $62.2 million, peHUB has reported. (Five Below paid out another “special dividend” in 2010 of $196.7 million, but Advent wasn’t a shareholder at the time).

Advent also unloaded a small piece, about 2.84 million shares, in the Five Below IPO. At the time, it stood to make $47.6 million from the sale (at $17 each).

In all, Advent could realize $286.1 million from the dividend and stock sales. The firm’s remaining stake in Five Below, of 21.3 million shares, is valued at roughly $732.7 million. Including realized and unrealized gains, Advent could make 5.3x  the money it invested.

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