JDE Peet’s BV surged in Amsterdam trading after the coffee giant raised 2.3 billion euros (US$2.56 billion) in just 10 days to become Europe’s biggest initial public offering (IPO) this year.
The stock climbed 13 percent to 35.43 euros by 10:10am in Amsterdam.
The company, carved out of the Reimann family’s investment firm, JAB Holding Co, priced its shares at 31.50 euros each, according to a statement yesterday, in the upper half of the range of 30 euros to 32.35 euros at which the offering was marketed.
That gave the company a market value of 15.6 billion euros.
JDE Peet’s on Thursday said that it would close the book early after just three days of taking orders in the IPO.
Investor demand exceeded the number of shares being sold by multiple times at the offer price, with strong interest from institutions globally, the company said.
By condensing the usual four-week listing process to just 10 days, JDE Peet’s minimized its exposure to potential market swings tied to the COVID-19 pandemic.
The pandemic has upended the traditional IPO process, with shorter subscription periods, more cornerstone investors and virtual meetings to pitch the offerings to investors. Cornerstone investors, including funds run by billionaire George Soros’s firm, are taking up one-third of JDE Peet’s offering.
JDE Peet’s is attractive in part because it should grow at a faster rate than the global economy and also pays a dividend, said Colin McLean, chief investment officer at SVM Asset Management, whose fund participated in the IPO and also bought shares once trading began.
“It’s a stable business making a steady move to premium, higher value-added coffee markets,” he said, describing the trading debut as a “reasonable start.”
The initial stock pop was to be expected given the high demand, he said, adding that his fund had received a lower-than-requested allocation.
The share sale saw strong demand from investors in the US, the UK and continental Europe, a person familiar with the transaction said.
Given the robust interest, keeping the order book open longer would have only exposed the transaction to downside risk, the person added.
The IPO brings to market a company that had sales of 6.9 billion euros last year and owns well-known supermarket brands including Douwe Egberts, Jacobs and Kenco, as well as US retailers Peet’s and Intelligentsia.
JAB created the company through a series of acquisitions, capped by the combination in December of Jacobs Douwe Egberts and Peet’s.
Coffee consumption has remained resilient during the pandemic, moving from offices and cafes into people’s homes, according to JDE Peet’s, which bills itself as the world’s largest pure-play coffee group.
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