Organic grocer Sprouts Farmers Markets LLC has filed to raise up to $300 million in an initial public offering of common stock.
Sprouts, backed by private equity firm Apollo Global Management LLC, has been eying the public market for a while, as Mergers & Acquisitions previously reported.
"Although Sprouts is likely to have significant strategic interest in the business, I think that an IPO would be a logical route for this company, given the ability to potentially have up to 1,000 stores nationally and the premium valuations being afforded to high-growth, specialty-food players," said Andy Jhawar, senior partner and co-head of the consumer and retail industry group at Apollo's private equity division, in a 2012 interview.
Jhawar, who joined the private equity firm in 2000, has been helping Apollo grow its presence in supermarket sector. The firm acquired a majority controlling stake in Phoenix-based Sprouts, which was founded by the Boney family, in 2011 and combined it with Henry's Marketplace, a company also founded by the Boney family that had been bought by Whole Foods and then bought by Apollo for $166 million in 2007.
In 2012, Apollo mergers Sprouts with Boulder, Colo.-based Sunflower Farmers Market. That deal helped push the annual revenues of Sprouts into the $2 billion range, securing the retail chain’s position as one of the major supermarket heavyweights in the Southwest region of the United States. The company booked $1.8 billion in sales for a 12-month period as of Dec. 30, 2012.
Sprouts, which operates more than 150 stores across eight southwestern states, intends to list shares on the Nasdaq exchange under the ticker symbol SFM. Proceeds from the filing will be used to pay down debt. Goldman Sachs & Co. (NYSE: GS), Credit Suisse (NYSE: CS), and Bank of America Merrill Lynch (NYSE: BAC) are the joint bookrunners.
For more on the growth of Sprouts and other grocery store chains, see “Grocers Grow,” Mergers & Acquisitions’ May 2012 cover story.