July 25 (Bloomberg) -- U.S. initial public offerings are set for their busiest week since April as purveyors of steak, burritos and software strive to go to market before investor optimism wears off.
Del Frisco’s Restaurant Group Inc., Chuy’s Holdings Inc. and five other companies are attempting to raise as much as $824 million, data compiled by Bloomberg show. That would be the most IPOs in the U.S. since the week of April 16. Avast Software NV withdrew its IPO today, citing market conditions, according to a regulatory filing.
The IPOs come on the heels of sales last week by Palo Alto Networks Inc., Kayak Software Corp. and teen retailer Five Below Inc., which surged on their first trading days. Tex-Mex restaurant chain Chuy’s raised $75.8 million on July 23 and jumped 16 percent in its debut, giving further impetus to this week’s sellers even as concerns persist over Europe’s debt crisis and the economic recovery in the U.S., said James Investment Research Inc.’s Tom Mangan.
“There’s nothing like someone else’s success to encourage you to take that leap as well,” said Mangan, who helps oversee $3.4 billion at the Xenia, Ohio-based firm. “There’s some urgency on the part of people who want to proceed with an IPO because they’re afraid of what might happen later in the year.”
Europe’s debt woes overshadowed the positive streak for some companies. Avast, the Czech maker of antivirus software, had planned to raise as much as $99 million in its U.S. IPO this week before suspending the sale. English soccer club Manchester United Ltd. is delaying marketing for its planned sale because of stock volatility, Reuters reported earlier.
The Standard & Poor’s 500 Index fell 2.8 percent through yesterday after reaching a two-month high last week, and the measure of stock-market volatility known as the VIX had surged 32 percent to more than 20 after hitting the lowest in almost four months on July 19. Companies may be eager to complete IPOs before August, when many investors typically go on vacation.
“It’s more of an opportunistic environment for deals rather than a blanket,” said Jack Ablin, who helps oversee about $60 billion as chief investment officer of BMO Harris Private Bank in Chicago. “Having the VIX push 20 can’t help their cause right now.”
Chuy’s sold 5.83 million shares at $13 apiece in its IPO, valuing the Austin, Texas-based company at $195.6 million, or about 1.4 times sales of $138.9 million in the 12 months through March 25. That’s double the median price-to-sales ratio of about 0.7 for publicly traded peers.
Steakhouse chain Del Frisco’s aims to raise as much as $112 million tomorrow, data compiled by Bloomberg show. At the midpoint of its proposed price range, the Southlake, Texas-based restaurant operator would be valued at about $335 million, or 1.6 times last year’s sales, compared with about 0.7 times for peers.
Both Chuy’s and Del Frisco’s are majority owned by buyout firms, and their success may pave the way for other private-equity-backed eateries to dive into public markets. Last year they filed to raise $2.71 billion through IPOs, more than the previous six years combined. CKE Inc., the operator of the Carl’s Jr. burger chain that’s owned by Apollo Global Management LLC, filed for an IPO in May and plans to raise as much as $230 million.
Today, Bloomin’ Brands Inc., the owner of the Outback Steakhouse restaurant chain, set terms for its IPO. The company and shareholders, including funds advised by Bain Capital Partners LLC, are seeking as much as $321.4 million in an IPO set for Aug. 7, a regulatory filing and Bloomberg data show.
Del Frisco’s, led by Chief Executive Officer Mark Mednansky, is offering 7 million shares at $14 to $16. Texas buyout firm Lone Star Funds, which owns the whole company, is paring its stake to 69 percent in the IPO. Del Frisco’s will list on the Nasdaq Stock Market under the symbol DFRG.
“It makes sense that private equity wants to unload them while they still can,” said James Investment’s Mangan. “Food prices are rising, and that’s squeezing the margins on restaurants, so you can expect to see disappointing earnings from many restaurant chains.”
There have been more than $33 billion in U.S. IPOs this year. Technology and Internet companies accounted for almost one-fourth of those offerings, with sales for Facebook Inc., Kayak, Palo Alto and ServiceNow Inc., the maker of cloud-based software.
Those have set the stage for other technology providers to brave public markets. E2open Inc., a maker of cloud-based software for businesses, is aiming to raise $80 million in an IPO scheduled for today.
“The market for a long time has been focused on growth, and that demand for growth has only gotten more acute,” Colin Stewart, vice chairman of global capital markets at Morgan Stanley, said in a July 19 phone interview. “People will look and pay for great growth assets in the stock market even with economies looking weaker around the world.”
Other companies scheduled to hold offerings this week include gasoline refiner Northern Tier Energy LP, seeking as much as $341 million, and AmREIT Inc., a Texas mall operator planning to raise $54 million. Drugmaker Hyperion Therapeutics Inc. is seeking a similar amount.
Natural Grocers by Vitamin Cottage Inc., the organic grocer and dietary supplements chain, raised $107 million last night, pricing its stock at $15, the top of the proposed range. The shares gained 19 percent to $17.86 as of 4:05 p.m. in New York.
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