Mexican supermarket chain BBB Foods made a splash on Wall Street with its recent initial public offering (IPO). The company’s stock rose 14% on its trading debut, capturing the attention of investors. BBB Foods opened at $19.50 per share and reached $20.05 per share in afternoon trading, surpassing its IPO price of $17.50 per share.
The IPO was highly anticipated, as evidenced by the fact that BBB Foods priced its shares at the top of its estimated range of $16.50 to $17.50 per share. With 33.66 million shares available in the IPO, the company generated an impressive $589 million in proceeds, making it one of the largest deals of 2024 so far. Major banking institutions such as JPMorgan, Morgan Stanley, BofA Securities, ScotiaBank, and UBS served as underwriters for the IPO.
Investors were attracted to BBB Foods because of its rapid growth in the Mexican supermarket industry. The company has achieved a compound annual growth rate of 34.4% between 2020 and 2022. BBB Foods currently operates approximately 2,300 stores but envisions a market potential for up to 12,000 stores in Mexico. The company believes there is a significant opportunity for expansion due to favorable demographic trends, the under-penetration of hard discount stores in the Mexican grocery market, and the growing appeal of hard discount stores among Mexican consumers.
Despite its promising future prospects, BBB Foods reported a loss of $11.87 million on revenue of $1.8 billion in the nine months leading up to September 30th. However, this is an improvement compared to the previous year’s loss of $32.1 million and revenue of $1.85 billion. The company hopes that its IPO will provide the necessary capital to fuel its growth and turn these losses into profits.
Prior to its IPO, BBB Foods increased its estimated price range from $14.50 to $16.50 per share and expanded the offering size to 33.66 million shares from 28.05 million shares. The additional 5.61 million shares were all sold by existing BBB Foods shareholders, including Quilvest Capital Partners, with no proceeds going to the company itself.
BBB Foods’ IPO comes at a time when the market is more receptive compared to the previous year. However, the IPO market remains volatile, as seen in the recent stock-market debut of luxury ski and clothing brand Perfect Moment Ltd., which experienced a decline in its stock price.
Overall, BBB Foods’ successful IPO and the subsequent increase in its stock price demonstrate investors’ confidence in the company’s growth potential. With a strong foothold in the Mexican grocery market and ambitious expansion plans, BBB Foods is poised to become a major player in the industry. Investors will be keeping a close eye on this promising supermarket chain as it continues to make waves on Wall Street.
