The IPO Buzz: BBB Foods (TBBB Proposed) Upsizes IPO to $572.2 Million – 17 Percent Secondary

BBB Foods, Inc. (TBBB proposed), the parent of Mexico’s discount grocery store chain, increased its IPO’s size early today to $572.2 million by raising both the number of shares and the price range – hours ahead of the IPO’s pricing, expected tonight after the market’s close. The IPO’s size was raised to 33.66 million shares – from 28.05 million shares originally. Selling stockholders are offering 5.61 million shares – or 17 percent of the stock in BBB Foods’ upsized IPO. The company is now offering 28.05 million shares. BBB Foods also raised its IPO’s price range to $16.50 to $17.50 – up from $14.50 to $16.50 originally. BBB Foods will not receive any proceeds from the sale of the selling stockholders’ shares.

Cornerstone investors – funds affiliated with Capital International Investors – have increased their indication for an aggregate of up to $95 million – up from their initial indication for an aggregate of up to $88 million – of stock in the IPO at the IPO price, according to the amended prospectus.

BBB Foods made some waves in the IPO market by disclosing the deal’s increased size in an F-1/A filing dated today – Thursday, Feb. 8, 2024 – just hours ahead of the IPO’s pricing. The IPO is scheduled for pricing tonight. BBB Foods’ stock is expected to start trading Friday, Feb. 9, on the New York Stock Exchange.

J.P. Morgan, Morgan Stanley, BofA Securities, Scotiabank and UBS Investment Bank are the joint book-runners.

BBB Foods says it intends to use the IPO proceeds to pay off debt.

To be clear: BBB Foods will not receive any proceeds from the sale of the selling stockholders’ shares. The company’s estimated proceeds from the upsized IPO will be $476.85 million, assuming pricing at $17.00, the mid-point of today’s upwardly raised price range. The company stands to receive about 9.7 percent more in proceeds under the IPO’s upsized terms, when compared with the original estimated proceeds of $434.8 million.

Taken all together, the IPO would bring in about $572.22 million, assuming mid-point pricing at $17.00, based on the sale of 33.66 million shares, including the selling stockholders’ offer of 5.61 million shares. That combined amount is about 31.6 percent higher than the originally estimated IPO proceeds of $434.8 million. 

The Mexican discount grocery chain’s parent would have a market cap (valuation) of about $1.91 billion, if the IPO is priced at the $17.00 mid-point of its upwardly revised price range.  

BBB Foods, Inc., based in Mexico City, is the holding company that operates more than 2,200 Tiendas 3B stores in about a dozen states in Mexico. The 3B stands for “Bueno, Bonito y Barato” – or “good, nice and affordable” in Spanish, according to the prospectus. The company’s Tiendas 3B grocery stores are similar to Germany’s stripped-down discount grocery chains Aldi and Lidl. The company carries about 800 branded, private label and spot products (800 stock-keeping units or 800 SKUs) that include food and snacks, household cleaning products, diapers and pet foods at discount prices.

Anthony Hatoum, a Lebanese-American entrepreneur with a civil engineering background, moved to Mexico and founded Tiendas 3B in 2004.

The Mexican discount grocery store chain’s parent company reported a net loss of $10.79 million on revenue of $2.34 billion for the 12 months that ended Sept. 30, 2023, according to financial statements in the prospectus.

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