Fast-casual restaurant chain Cava Group Inc. exceeded its target by raising $318 million in an initial public offering, the biggest listing on a US exchange in six weeks.
(Bloomberg) — Fast-casual restaurant chain Cava Group Inc. exceeded its target by raising $318 million in an initial public offering, the biggest listing on a US exchange in six weeks.
Cava sold more than 14 million shares for $22 each after marketing them for $19 to $20, a range it had elevated earlier, according to a company statement Wednesday. At the IPO price the company has a market value of $2.45 billion based on the outstanding shares listed in its filings with the US Securities and Exchange Commission.
The Mediterranean eatery’s IPO is the sixth-largest on a US exchange this year, according to data compiled by Bloomberg.
Cava’s strong pricing came even as its initial valuation drew skepticism from analysts including Bloomberg Intelligence’s Michael Halen and New Constructs Chief Executive Officer David Trainer. Both said the company’s valuation on some metrics was far higher than peers such as Chipotle Mexican Grill Inc., highlighting lagging restaurant-level margins. Analysts have compared Cava to restaurant companies such as Portillo’s Inc. and Sweetgreen Inc., both of which saw initial pops in their trading debuts before slumping over time.
Johnson & Johnson consumer health spinoff Kenvue Inc. scored the largest US listing this year with its $4.37 billion IPO on May 3. Kenvue alone accounted for more than $4 out of every $10 raised on US exchanges in what is on pace to be the slowest year since at least 2009.
Cava’s revenue has climbed while its losses have shrunk year over year. For the 16-week period ended April 16, it had a net loss of $2.1 million on revenue of $203 million, compared with a loss of $20 million on revenue of $159 million during that period last year, according to the filing.
Washington-based Cava said it now has 263 restaurants, compared with 22 in 2016. The company plans to use the proceeds from the IPO to open more restaurants and sees the potential for more than 1,000 within the next decade.
The offering was led by JPMorgan Chase & Co., Jefferies Financial Group Inc. and Citigroup Inc. The company’s shares are expected to begin trading Thursday on the the New York Stock Exchange under the symbol CAVA.
–With assistance from Daniela Sirtori-Cortina.
(Updates with analyst comments in fourth paragraph. The company’s revenue was corrected in an earlier version of this story.)
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