Savers Value Village Climbs After IPO While Kodiak and Fidelis Falter in Debuts

Savers Value Village Inc. gained 27% in its trading debut, making its $401 million initial public the lone bright spot in a key test of the US market that delivered otherwise disappointing results.

(Bloomberg) — Savers Value Village Inc. gained 27% in its trading debut, making its $401 million initial public the lone bright spot in a key test of the US market that delivered otherwise disappointing results.

Two companies that debuted Thursday, Kodiak Gas Services Inc. and Fidelis Insurance Holdings Ltd., first stumbled out of the IPO gate and then lost value on their first day on the New York Stock Exchange.

The listings followed this month’s offering by Cava Group Inc. that exceeded the fast-casual restaurant chain’s fundraising goals and has since delivered a 98% return to IPO investors. That led some to believe that US IPOs might be ready to emerge from their deepest and longest slump since the global financial crisis more than a decade ago.

Shares of Savers Value Village Inc., which sold shares for $18 to exceed its fundraising goal, rose as much as 39% before closing at $22.91, giving the company a market value of $3.7 billion.

“We’ve got secular trends that continue to move in our direction with thrift and reuse and what that can mean in terms of improving our planet,” Chief Executive Officer Mark Walsh said in an interview. “We waited for the right time when the market was reasonably open, and we’ve had a very successful roadshow culminating in better than expected pricing.”

Kodiak, which sold its shares for $16 each after marketing them for $19 to $22, fell 1.9% following its $256 million IPO.

Fidelis fared the worst of the three, downsizing its offering and pricing it $2 below the marketed range to raise only $210 million, compared with up to $323 million it had sought at the top of its range. Its shares fell 7.9% to $12.90 on their first day of trading.

IPO Timing

“Obviously we’d like to trade a little higher,” Fidelis CEO Dan Burrows said in an interview. Burrows, who rang the opening bell on the exchange floor, said the reinsurer is building momentum and the timing of the IPO was right for “marrying opportunity with access to capital.”

The mixed showing by the three indicates listings aren’t likely to roar back.

“It’s good to begin to see a number of sizable IPOs in varied sectors cross the finish line,” said Mark Schwartz, Ernst & Young’s Americas IPO and SPAC advisory leader. “Investor demand for new issues is there, but not at any price. We may be following a fairly typical IPO market reopening pattern as investors demonstrate pricing discipline in these earlier deals, which could lead to stronger after-market performance and hopefully additional activity going forward.”

JPMorgan, Goldman

JPMorgan Chase & Co. was a lead underwriter for all three, while Goldman Sachs Group Inc. was on the top line for Kodiak and Savers Value Village along with Jefferies Financial Group Inc. for Fidelis and Savers Value Village. Additionally, Barclays Plc is among the top banks for Kodiak, as is UBS Group AG for Savers Value Village.

With 317 stores, Bellevue, Washington-based Savers Value Village is the largest for-profit thrift retailer in the US and Canada. It generated 2022 net income of $85 million on net sales of $1.4 billion, according to it’s filings with the US Securities and Exchange Commission.

Funds managed by Ares Management Corp., which continues to control the retailer, sold more than 3.5 million shares in Wednesday’s IPO, according to the statement. The company’s shares are trading under the symbol SVV.

Bermuda-based reinsurer Fidelis reported net income of $62 million in 2022, with $1.7 billion in net income in the first quarter. Crestview Funds and a subsidiary of Abu Dhabi Investment Authority, along with affiliates of CVC Capital Partners and Goldman Sachs, are among the investors that planned to sell shares, which is trading under the symbol FIHL.

‘Long Game’

Kodiak, based in Montgomery, Texas, had net income of $106 million on revenue $708 million last year, according to its filings with the SEC. In the first quarter, though, Kodiak slipped into the red with a loss of $12 million on $190 million in revenue.

An affiliate of Swedish investment firm EQT AB will own about 79% of Kodiak. It’s trading under the symbol KGS.

Kodiak CEO Robert “Mickey” McKee said raising less in the IPO than anticipated will minimally reduce the debt it will pay down but won’t affect its plans. That includes providing gas compression services for new and expanded LNG facilities on the Gulf Coast.

“We’re in good shape,” he said. “This is a long game for us. The market will do what it does and price where it prices us.”

(Updates with closing share prices starting in fourth paragraph)

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