Apollo to Make 5.3x its Money with Sprouts Farmers Markets IPO

Apollo Global Management could increase the value of its investment more than five-fold when Sprouts Farmers Markets goes public next week.

Phoenix-based Sprouts, a natural food grocery store, recently set the terms of its IPO. The company is selling 18.5 million shares at $14 to $16 each via joint bookrunners Goldman Sachs & Co., Credit Suisse and BofA Merrill Lynch, according to a July 19 regulatory filing. Sprouts is expected to trade on the Nasdaq under the ticker “SFM.”

Sprouts is expected to price its IPO on Thursday, Aug. 1, sources says. It will likely trade the next day.

Sprouts, which sells fruits, vegetables and herbs, operates 163 stores in eight states, including Arizona, California, Texas and Colorado.

Apollo’s investment in the company dates back to 2011. In April of that year, Apollo acquired a majority stake, 58.5%, in Sprouts for $214 million, the filing says. Sprouts then acquired Henry’s Farmer’s Markets from Smart & Final, which was also owned by Apollo.

Sprouts then paid out a $199.1 million special dividend to “all members of the company,” according to the S-1. Apollo, however, didn’t receive any of this, peHUB has learned.

This year, Sprouts issued a $282 million dividend to shareholders, including Apollo. The buyout shop, which owns 52% of Sprouts, received about $147 million.

Apollo is not selling shares in the Sprouts IPO. Before the offering, Apollo owned 65.2 million shares, or nearly 52% of shares outstanding, the filing says. Apollo’s stake will fall to 45.4% after the IPO. At $15 a share, the mid-point of the IPO range, Apollo’s stake could be worth $978 million once Sprouts goes public.

Including realized and unrealized gains, the buyout shop stands to make about 5.3x its money.

Officials for Apollo declined comment.

Photo courtesy of Sprouts