These days it seems as though everyone is standing in line to get an IPO. Today, the parent company of Outback Steakhouse, Bloomin’ Brands, announced they would be filing for IPO. This is yet another private equity-held company that is looking to get into the stock market.
According to sources, the company is looking to raise up to $300 million. The funds gained from the IPO would go towards paying off $248.1 million in maturing bonds, however, they hold a total of $2.1 billion in debt.
Bloomin’ Brands, once known as OSI Restaurant Partners, was bought out in 2006 by Bain Capital, Catterton Management and three original founders for $3.2 billion. After reporting a $863 million loss in 2008, the company finally became profitable again in 2010. Since then it has been reporting impressive numbers. In 2011, The Outback parent announced earnings of $100 million, $3.8 billion in revenue. After finally getting back to a profit, the private equity holders are trying to free up capital and tie in gains, as well as losses.
Personally, I think it’s ridiculous that all these brands are coming public but Bloomin’ Brands may be a game changer. The company does not just own Outback Steakhouse, they also own up and coming restaurants such as Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse and Wine Bar. These are up and coming restaurants that could likely take away market share from some of YUM Brand’s portfolio of restaurants.
As for the private equity sell, this has been a common trend lately as private equity firms are trying to lighten up portfolios after some of their investments finally turn profitable again. This is a common aftershock from a recession. Private equity investments get hit hard during a recession and can take longer to recovery. Once they recovery, most firms like to sell the stake and lock in gains. Now, the latest trend is to simply go public with the company instead of selling. The reason being for this is the private equity firm gets to make a little extra cash when their holdings go public, at least in theory.
Bottom line, the recovery has clearly strengthened and hopefully will continue to strengthen. Be careful of the possibility of a correction in the coming months, markets starting to look very overbought with some unpleasant news swirling around.