Cerberus Capital Management portfolio company Albertsons has placed a proposed maximum offering price of $1.84 billion for its upcoming IPO, according to a recent SEC filing. Planning to list on the NYSE under the symbol ABS, the company intends to use most of the proceeds from the offering to repay debt, redeem outstanding notes and pay fees/expenses related to the IPO. The food & drug retailer has been backed by Cerberus since 2006 and generated $18.1 billion in revenue during its 2015 fiscal 1Q; earlier this year, Cerberus sponsored Albertsons' $9.4 billion merger with Safeway.
U.S. PE-backed IPOs have declined significantly this year—down 56% by count and 70% by capital raised in 1H compared to 2014's first half—according to our 3Q U.S. PE Breakdown Report. Other exit ramps have been simply much more attractive and lucrative in the current environment. As such, an Albertsons offering comes at an interesting time. Sure, there are synergies yet to be realized from the Safeway merger, and the capital being raised in the IPO should help boost its bottom line, yet nonetheless, it will be interesting to see if the grocery chain will be able to price at a level that actually brings in $1.84 billion.