YETI Holdings, which is scheduled to go public this week, looks as if it will produce a massive return for Cortec Group.
The Austin company is set to price its IPO on Oct. 24 and begin trading the following day, a source said.
Yeti is selling 20 million shares at $19 to $21 each. Underwriters on the deal have the option to buy another 3 million shares at the public-offering price (the so-called greenshoe).
YETI itself is offering 2.5 million shares, while stockholders are providing 17.5 million.
Cortec stands to make 20.1x its investment with the IPO. The megareturn comes six years after the New York private equity firm acquired YETI Coolers in 2012.
In 2006, fishermen Roy and Ryan Seiders founded YETI. The brothers wanted a cooler they could stand on without fear of collapse as they fly-fished, Inc magazine reported.
The YETI coolers claim to be bear-resistant and “will protect your food, drink or catches from burly party crashers of any stripe,” the website said.
The Tundra 75 cooler, which can hold 57 cans of beer or 70 pounds of ice, sells for $449.99. The Boomer 8 Dog Bowl is made from stainless steel and can hold eight cups of water or treats. It sells for $49.99.
YETI is credited with creating a new category with its luxury coolers, but it hasn’t been easy.
Profit for the company tumbled 68 percent to $15.4 million in fiscal 2017 from $48.8 million in 2016. Sales fell nearly 22 percent to $639.2 million in 2017 from $818.9 million in 2016.
Long-term debt stood at $388.4 million as of June 30. YETI employed 507 at the end of 2017.
Cortec paid $67 million for two-thirds of the company, the Wall Street Journal reported. The investment came from Cortec’s fifth fund, which closed on $620 million. Cortec Fund VI collected $1.1 billion in 2015.
YETI appears to have paid just a single dividend to date. The $451.3 million distribution occurred in May 2016, an SEC filing said.
Cortec received $312.1 million from the distribution. YETI said it had not declared or paid out any other dividends on its common stock, the filing said.
A big chunk of the 20 million offered in the YETI IPO is coming from Cortec. The PE firm plans to sell 13.3 million shares. At $20 each, the midpoint of its IPO range, Cortec stands to receive $266 million.
The sale will reduce the PE firm’s stake to 40.7 million shares, or 48.7 percent, assuming the greenshoe is exercised. The 40.7 million shares would be valued at $814.7 million at $20 each.
In all, Cortec looks to make about $1.4 billion, including paper gains. The total includes the $312.1 million from the dividend, the $266 million from the sale of shares in the IPO and the value of its remaining shares, or $814.7 million.
Divided by Cortec’s initial $67 million investment, the $1.4 billion would produce a return of 20.1x.
Other notable YETI shareholders include Oaktree Specialty Lending. Oaktree holds 794,000 shares, or about 1 percent. It is offering 219,712 shares valued at about $4.4 million.
Harris Williams, which advised YETI in its sale to Cortec, also has some shares. HM YETI LLC owns 595,500 and is offering 164,784 in the IPO. At $20 a share, the sale could produce about $3.3 million.
H. Hiter Harris III, who co-founded Harris Williams, along with Managing Directors Edward Valentine and Cheairs Porter, are listed as managers of HM YETI LLC.
YETI, Harris Williams and Cortec could not be reached for comment.
Action Item: YETI CEO Matthew Reintjes can be reached at +1 512-394-9384.