Grill maker Weber Inc. sold fewer shares at a lower price than expected in its initial public offering, people familiar with the matter said, with the latest sign the new-issue market is cooling after a torrid run this summer.
Weber sold 18 million shares at $14 apiece, the people said, before its trading debut of Thursday. The company and its sold shareholders had plans to sell roughly 47 million shares at a price between $15 and $17. Instead, the company sold shares in the offering, which then pegs Weber's fully diluted valuation at $5 billion.
The high-profile launch of the disappointing listing follows the postponement of several other IPOs. Last week five deals were canceled or withdrawn, the most since 2016 according to Dealogic.
The performance of newly listed shares has also been lackluster. Traditionally entered IPOs - but not including companies with special purpose acquisition or direct listings - were up roughly 9% to close on Tuesday, according to Dealogic, compared with a 15% gain for the tech-heavy Nasdaq Composite Index. Earlier this year, Nasdaq outperformed IPOs.
The IPO markets have been on fire for much of the first half of this year. U.S. listed traditional IPOs raised more than $102 billion through Tuesday, on track to soon exceed any other full-year record, according to Dealogic. In June alone, IPOs raised more than $4 billion in traditional values. But investors say the hurry of IPO pitches has been exhausting and they're eager for a quieter August. The number of companies who did IPOs in September should increase, say bankers.
Byron Trott is majority-owned by BDT Capital Partners LLC, the investment and advisory firm of former Goldman Sachs Group Inc. banker Weber. Trott is buying shares of the offering, the people said.
Weber follows Traeger Inc. another outdoor grill and grill-accessories company, in going public this summer and capitalizing on the extra demand for their products stemming from coronavirus pandemic. While both are growing, some investors pointed to Traeger's faster pace as a reason for its IPO's more favorable reception. Traeger financed his IPO on the top of its targeted range last month, giving the company a valuation of more than 2 billion dollars. The stock is up more than 50% from its IPO price until Wednesday's close.
Weber, which traced its roots back nearly 70 years and is synonymous with backyard grilling, said that sales for the three month period ended March 31 rose roughly 60% from a year earlier to about $960 million.
Traeger, known for its wood-pellet grills, said its sales more than doubled in the first quarter to about $235 million.