BBB Foods, Inc. (TBBB), the parent of Mexico’s Tiendas 3B discount grocery store chain, priced its upsized IPO at $17.50 – the top of its recently increased range – on 33.66 million shares – the number of shares in its revised prospectus – to raise $589.05 million on Thursday night (Feb. 8, 2024). Shares of BBB Foods jumped 11.43 percent to open at $19.50 – up $2.00 from their IPO price – after 1 p.m. EST today – Friday, Feb. 9, 2024 – on the New York Stock Exchange. BBB Foods’ stock closed at $19.05 – up $1.55 for a gain of 8.86 percent – in its first day of NYSE trading.
The IPO’s proceeds exceed the estimate of $572.22 million, which was based on pricing at the $17.00 mid-point of the company’s increased range – $16.50 to $17.50 – disclosed Thursday morning in an SEC filing.
This is the largest IPO in the U.S. by a Mexico-based company since Santander’s Mexican unit went public in 2012, according to data compiled by Bloomberg.
J.P. Morgan, Morgan Stanley, BofA Securities, Scotiabank and UBS Investment Bank were the joint book-runners.
The high-end IPO pricing gave BBB Foods a market cap (valuation) of $1.96 billion.
Of the 33.66 million shares in the IPO, the company offered 28.05 million shares and selling stockholders offered 5.61 million shares. The company will not receive any proceeds from the sale of the selling stockholders’ shares.
BBB Foods’ proceeds from the IPO – before deducting expenses – are estimated at about $490.88 million. The company plans to use the IPO’s proceeds to repay in full its outstanding promissory notes and convertible notes as well as for general corporate purposes, BBB Foods said in an SEC filing released Friday, Feb. 9, 2024. (The filing is dated Feb. 8, 2024.)
The 3B in the company’s name stands for “Bueno, Bonito y Barato” – or “good, nice and affordable” in Spanish, according to the prospectus.
The Tiendas 3B stores are similar to Aldi and Lidl, Germany’s stripped-down discount grocery chains.
BBB Foods, 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 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.
“We are pioneers and leaders of the grocery hard discount model in Mexico and one of the fastest-growing retailers in the country as measured by our sales and store growth rates,” the prospectus says.
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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