On the Margin
Performance Food Group has a modest IPO

Performance Food Group has a modest IPO

This post is part of the On the Margin blog.

Performance Food Group had its IPO on Thursday and Wall Street largely yawned.

The Richmond, Va.-based company’s stock rose just 1 percent on its debut, after pricing its offering at $19 a share.

And that was below the $22 to $25 per share initial range the broadline distributor expected to receive — an indication that demand wasn’t strong enough for the company to get its requested price.

The company sold 14.5 million shares at $19 per share, enabling it to raise $292.6 million. PFG plans to use the funds to repay debt and for general corporate purposes.

PFG is one of the largest foodservice distributors in the country, having generated $15.7 billion in sales in its most recent fiscal year and a net income of $56.5 million. Yet even with that size it only represents about 6 percent of the $240 billion U.S. foodservice distribution industry.

Customers include Bonefish Grill, Chili’s, Cracker Barrel, O’Charley’s, Outback Steakhouse and TGI Friday’s as well as QSRs like Wendy’s and Yum Brands.

Revenue has increased 12 percent the past two years, according to SEC filings. The company has also made a lot of acquisitions — 14 in just the past seven years, according to the company.

It had a 15th, but lost that when the federal government decided to oppose Sysco’s merger with US Foods, a deal that also ended PFG’s planned purchase of 11 US Foods facilities.

The deal’s sponsors were the private equity groups Blackstone and Wellspring Capital Management. Underwriters include Credit Suisse, Barclays, Wells Fargo, Morgan Stanley, Blackstone, BB&T Capital Markets, Guggenheim Securities and Macquarie Capital.

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