Safeway’s Blackhawk Plans to Raise Up to $200 Million in IPO

Blackhawk Network Holdings Inc., a gift-card provider owned by Safeway Inc., filed for a U.S. initial public offering as consumers increase prepaid spending.

The company plans to raise as much as $200 million, which is a placeholder that may change. The stock will be sold by existing investors including Safeway, according to a filing today with the U.S. Securities and Exchange Commission.

Safeway, the second-largest U.S. grocery chain, is selling a minority stake in Blackhawk as industry newsletter the Nilson Report predicts U.S. consumer spending on such cards may reach $274.7 billion in 2016, a 48 percent increase from 2011. Safeway had announced its IPO plan in September.

Blackhawk didn’t say today how many shares it will offer or at what price. The company said it applied to list shares on the Nasdaq Global Select Market under the symbol “HAWK.” The IPO will be led by Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and Deutsche Bank AG.

Blackhawk’s products include gift cards to restaurants, retail and grocery stores in the U.S., Canada, Europe, Mexico and Australia, and online. The company also makes cards and has introduced digital-wallet services.

Safeway fell 0.3 percent to $24.84 at the close in New York. The Pleasanton, California-based company has advanced 37 percent this year, while the Standard & Poor’s 500 Index has gained 8.8 percent.

Wal-Mart, Target

The company is working to compete with big-box discount stores such as Wal-Mart Stores Inc. and Target Corp. Last month, Safeway reported fourth-quarter earnings that exceeded analysts’ estimates as its store sales rose.

Total revenue at Safeway increased 1.2 percent to $13.8 billion during the three months ended Dec. 29, the company said in a statement on Feb. 21. Sales were helped by higher gift and prepaid card sales and an 0.8 percent gain in identical-store sales, excluding fuel, Safeway said in the statement.

The grocer earns commissions, which are recorded as other revenue, from Blackhawk card sales, according to a company filing.

Kroger Co. is the largest U.S. supermarket chain.