Mexican discount retailer BBB Foods Inc. rose up to 19% in its stock market debut after its U.S. initial public offering traded at the top of a price range to raise about $589 million.
The actions of BBB Foodswhose performance boosts the rebound in IPOs in the USU., opened trading on Friday at US$19.50 a unit after selling for US$17.50 in the initial public offering. The shares rose more than 18% to US$20.77 at 1:14 pm in New York, giving the company a market value of more than US$2.3 billion.
The IPO, the fifth largest of the 29 that have taken place this year in the US, is one of nine this week, as more companies prepare to go public after two years of declining operations. The offer is also the largest it has made in the US. a Mexico-based company since Santander floated its Mexican subsidiary in 2012, according to data compiled by Bloomberg.
BBB Foods is the first Mexican consumer-oriented company to conduct an IPO since Becle, the maker of José Cuervo tequila, went public in Mexico in 2016. However, Latin America’s second-largest economy saw $1.2 billion in secondary equity issuances in the U.S. and Mexico last year from companies that benefited from a boom in factory production, tripling the amount raised in 2022.
BBB Foods on Thursday increased the number of shares it would sell in the IPO by about 20%, to $33.7 million, and raised the price range to between $16.50 and $17.50. Previously, the company had marketed around 28 million shares at a price between US$14.50 and US$16.50 per unit.
The main subsidiary of BBB Foods operates more than 2,200 3B Stores in a dozen states in Mexico. The acronym 3B stands for “good, pretty and cheap,” which the company translates as “good, pretty and affordable” in its prospectus.
Tiendas 3B was founded by Anthony Hatoum, a Lebanese-American businessman who moved to Mexico about two decades ago to start discount retail. Following the business model of the German discount chain Aldi, 3B offers a limited variety of products ranging from snacks and pet food to cleaning products and diapers at competitive prices.
In the nine months to September 30, BBB Foods posted a net loss of $12 million on sales of $1.8 billion, a 37% increase in revenue from the same period a year earlier. The company reported in its presentations that it sees potential to open another 12,000 stores in Mexico.
Bolton Partners Ltd., a Hatoum-affiliated vehicle, will hold nearly 47% of the company’s combined voting power after the IPO, according to filings. The selling shareholders, including Hatoum, offer five million additional Class A shares if the underwriters exercise their over-allotment option.
The IPO is led by JPMorgan Chase & Co. and Morgan Stanley. The company’s shares are listed on the New York Stock Exchange under the symbol TBBB.