Wall Street hungry for IPO of Mexican supermarket chain BBB Foods as stock rises 15%

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BBB Foods Inc.’s stock rose 14% in its trading debut on Friday, as Wall Street gobbled up shares of the rapidly-growing Mexican supermarket chain.

BBB Foods
opened at $19.50 a share and rose to $20.05 share in afternoon trading, for comfortable gain over its IPO price of $17.50 a share.

In a sign of keen interest ahead of its debut, the initial public offering BBB Foods priced the top of its estimated range of $16.50 to $17.50 a share.

With 33.66 million shares in the IPO, the IPO generated $589 million in proceeds as one of the larger deals to debut so far in 2024.

Banking giants JPMorgan, Morgan Stanley, BofA Securities, ScotiaBank and UBS are underwriters of the IPO.

BBB Foods is offering shareholders a stake in a business with a compound annual growth rate of 34.4% between 2020 and 2022.

The BBB in its name stands for Bueno, Bonito y Barato, which translates to good, nice and affordable.

The company currently operates about 2,300 stores but sees market potential in Mexico for up to 12,000 stores.

“We believe that there is a large whitespace opportunity for Tiendas 3B,” the company said. “This opportunity will be driven by market expansion as a result of favorable demographic trends, the under-penetration of hard discount stores in the Mexican grocery market, and hard discount’s growing appeal with the Mexican consumers.”

In the nine months that ended Sept. 30, BBB Foods reported a loss of $11.87 million on revenue of $1.8 billion, compared with a year-earlier loss of $32.1 million and revenue of $1.85 billion.

On Thursday BBB Foods boosted its estimated price range from its earlier level of $14.50 to $16.50 a share and also increased the size of the offering to 33.66 million shares from 28.05 million shares.

The additional 5.61 million shares are all coming from existing BBB Foods shareholders, including Quilvest Capital Partners, with no proceeds earmarked for the company itself.

The deal is coming in an IPO market that’s more receptive than 2023’s, but still choppy.

On Thursday, luxury ski and clothing brand Perfect Moment Ltd.
fell in its stock-market debut.

Also read: Amer Sports stock ends its first day of trading with a 3% gain over its discounted IPO price

And: IPO market continues its revival with investors looking to Amer Sports, BrightSpring — and Reddit

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