The IPO of Five Below rocketed nearly 60 percent on its opening day of trading this month, scoring a home run for backers Advent International.
Shares of the discount retailer surged $9.50, or 55.9 percent, to close at $26.50, accoridng to sister Web site peHUB. Volume was 10.5 million shares.
Five Below, which is backed by Advent and LLR Partners, raised $163 million in the offering. The company sold 9.6 million shares at $17 each, at the high end of its $15 to $17 price range, which itself was increased from $12 to $14. Joint book runners on the deal were Goldman Sachs, Barclays and Jefferies. Five Below is selling 4.8 million shares, while shareholders are offering another 4.8 million. Underwriters have the option to buy another 1.4 million shares, according to an SEC filing.
The Philadelphia retailer sells “extreme value merchandise” like soccer balls or sandals for $5 or less. The first store opened in 2002 and there are currently about 191 locations spread across 17 states.
LLR Partners reportedly invested $18 million in Five Below in 2005 and put another $17 million in 2008. It appears to have sold much of its stake to Advent, which in October 2010, acquired a majority holding in Five Below.
Advent invested $192.9 million equity in the deal while the Sargent Family put in $1.1 million, regulatory filings say.
Five Below has made two distributions. Earlier this year, the retailer paid a “special dividend” of about $99.5 million, SEC filings say. LLR received a $9.5 million payout earlier this year, while Advent got about $62.2 million, peHUB previously reported.
In 2010, Five Below paid a “special dividend” to shareholders of $196.7 million, which was tied to Advent’s takeover, SEC filings say. Advent was not a shareholder at this time and did not receive any part of this dividend, a source says. It’s unclear how much LLR received.
Advent only planned to sell a small chunk of its 62.5 percent stake in the IPO. The buyout shop was to unload 2.8 million shares and stood to make $47.6 million from the sale (at $17 each). This would have cut its holding to about 52 percent,or 27.8 million shares. At $26.50 a share, the firm’s remaining stake would be valued at roughly $736.7 million. Advent has already gotten back more than half of the money it invested in Five Below through the dividend and sale of shares. Including the value of its remaining stake, the buyout shop could make about 4.4x the money it invested.
The deal looks to be similarly fortuitous for LLR. The Philadelphia PE firm owned 9.6 percent of Five Below before the IPO. They sold 437, 212 shares in the IPO, which at $17 a share, means they likely stand to gain $7.4 million. The firm’s remaining stake falls to 7.9 percent, or about 4.3 million. At $26.50 a share, the holding is valued at roughly $114.
Officials for Advent declined comment.