Fairway Raises More Than $177 Million, Pricing IPO Above Range

Fairway Group Holdings Corp. (FWM), the grocery-store chain focused on greater New York, raised $177.5 million in its initial public offering after pricing the shares above the marketed range.

Fairway sold 13.65 million shares for $13 each, according to data compiled by Bloomberg, after offering them for $10 to $12. At the offering price, the New York-based company has a market value of about $536 million. The shares, which represent a 33 percent stake, will be listed on the Nasdaq Stock Market under the symbol FWM.

Fairway, which started as a small neighborhood market in the 1930s, is going public after expansion in suburban New York, New Jersey and Connecticut helped boost sales for at least three years in a row. Sales at Fairway rose 14 percent to $554.9 million in the year ended April 1, 2012. The company had a net loss of $11.9 million that year.

The food seller, which has 12 locations, said in a regulatory filing that it’s planning to add stores in population-dense metropolitan areas and has the potential for more than 300 new U.S. shops.

Sales at U.S. grocery stores may begin to increase after falling 2.1 percent in 2012, according to a report from industry researcher IBISWorld Inc. in Santa Monica, California. Revenue is projected to rise 0.4 percent a year, on average, and reach $500.9 billion in 2017, the data show.

Investor Appetite

Fairway joins companies in industries from technology to energy that are taking advantage of greater investor appetite for new equities as U.S. stocks surge to record highs this year. U.S. IPOs raised 37 percent more last quarter than they did in the year-earlier period, according to data compiled by Bloomberg.

Fairway, which gets about 65 percent of its sales from produce, organic items and prepared foods, competes with Austin, Texas-based Whole Foods Market Inc. and closely held Trader Joe’s, as well as big-box discounters Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT) Fairway stores sell organic milk and baby food, as well as gluten-free breads and pancake mix.

Of the 12 Fairway locations, three are Fairway Wines & Spirits stores, which sell craft liquors and gluten-free wines, as well as traditional alcohol.

Kroger Co. (KR) is the largest U.S. grocery-store chain.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

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