Burlington shares almost double in first day trading

ANALYSIS_ Shares at Burlington Stores Inc.'s (BURL.N) almost doubled after Bain Capital returned the discount apparel retailer to the stock market. The stock opened at 23.50 dollars and touched a high of 25.10 dollars in the first trading

session, valuing the company at 1.8 billion dollars.

Burlington Stores Inc. saw its shares closed up 47 percent to 25.01 on its first day of trade. Late Tuesday, it priced its public offering of 13.3 million shares at 17 a share, up from its initial range of 14 to 16 dollars, published ‘MarketWatch’. The company has raised circa 226.6 million dollars after pricing its IPO higher than expected.

“We are pleased with it, said chief executive Tom Kingsbury in an interview. “It’s very exciting that our story and transformation has really resonated with investors.”

This is also good news for Bain Capital, which took the company private in 2006 and will retain a 75 percent stake after the IPO. The private equity firm bought the company for 2.06 billion dollars in cash in January 2006, paying 45.50 dollars per share for the company founded in 1972.

Burlington will use some of the proceeds to redeem senior notes worth 171 million dollars. The company had about 1.7 billion dollars in long-term debt as of August 2013 and total cash and cash equivalents of 33.4 million dollars. "The company is highly leveraged. That's the fingerprint that all these private equity firms leave," said IPOFinancial.com president David Menlow commenting the news for ‘Market Watch’.

Burlington's IPO capitalises on discount retail boom

As per latest data on retail in the US, discount retailers have performed much better than higher-priced competitors, as a dreary job market hits consumer spending and many American shoppers contend with higher payroll taxes and gasoline prices.

"It's the hottest sector in retail," said Burt Flickinger, managing director at Strategic Resource Group, a consumer industry consultancy. "Disposable income is down," he said. "People can really save on food, fuel and clothing and Burlington is one of the key places to save."

The retailer behind the Burlington Coat Factory brand, taken private seven years ago, is the fourth company that Bain Capital has floated on the stock market this year. Burlington’s offering is part of the 160 US listed IPOs so far this year, a six-year high, according to Dealogic.

JP Morgan, Morgan Stanley, Bank of America Merrill Lynch, Goldman Sachs and Wells Fargo Securities were the lead underwriters for the Burlington IPO.