Food Brands Firm Sovos Climbs in Mixed Showing by Consumer IPOs

(Bloomberg) -- Food company Sovos Brands Inc. and a cadre of other consumer-oriented companies rose -- some modestly -- in their trading debuts after a mixed showing in a cluster of initial public offerings.

Sovos, which owns brands such as Rao’s Homemade pasta sauces and Birch Benders pancake mix, closed Thursday at 13% above its $12 IPO price, which fell short of a marketed range of $14 to $16. The company’s $280 million listing fell short of its earlier fundraising goal by almost $100 million.

“We’re thrilled about the investor base with the offering as we go forward,” Chief Executive Officer Todd Lachman said in an interview. “We are just really focused on the longer-term for the business.”

The priority of the Louisville, Colorado-based company, with a market value of $1.3 billion, will be increasing household penetration and expanding through the acquisition of new brands, Lachman said.

“We’ve averaged about one a year. I project that we probably would average about that amount going forward,” he said. “I can’t commit to a timing except to say that we have a team that knows how to do M&A. I have made lots of acquisitions in my career.”

The IPO was one of five Wednesday by companies involved in the consumer sector. Those going public included software companies providing the infrastructure supporting retailers, a key focal point as businesses of all sorts continue to digitize operations as the coronavirus pandemic lingers on.

Two of such companies exceeded their fundraising goals in their IPOs and saw their shares climb in their debuts.

Immigrant Focus

Seattle-based Remitly Global Inc., an online money transfer platform, raised $523 million with a sale of 12 million shares for $43 each after marketing them for $38 to $42. It shares gained 13% in their debut, giving the company a market value of $7.8 billion.

Remitly co-founder and Chief Executive Officer Matt Oppenheimer sees a large market opportunity for international remittance payments. The company is particularly focused on immigrant populations, which have been underserved, he said in an interview.

“Financial services are just not designed for immigrants,” he said. “Remitly’s goal is to change that.”

Boston-based EngageSmart LLC also surpassed its IPO target, bringing in $380 million with 14.6 million shares sold for a dollar above its $23 to $25 range. The customer engagement software maker backed by private equity firm General Atlantic closed up 31% to give it a market value of $5.5 billion.

General Atlantic has backed 18 companies that have gone public this year, said Paul Stamas, co-head of General Atlantic’s financial services sector and an investor in EngageSmart. The reception for the company reflects the investor interest in innovative tech and financial technology companies, he said.

“The public markets are now very, very excited and hungry to invest in those companies,” he said. “It is a recognition that there is a ton of innovation happening at a very fast pace. Investors are looking to back that innovation.”

Downsize, Pop

Online jewelry seller Brilliant Earth Group Inc. had the best finish of the day, rising 43% after downsizing its IPO and pricing it below range to raise $100 million instead of the $267 million it had sought.

“The way we’re thinking about the proceeds of the deal is really just to continue along are the growth factors that we’ve been already working on -- increasing our brand awareness, continuing to increase our showrooms, footprint,” CEO Beth Gerstein said in an interview. She’s also looking to international expansion.

Thorne HealthTech Inc., a New York-based provider of wellness products and services, was the only one of the group to lose ground, falling almost 25% in its debut. That was after it raised $70 million in its IPO after earlier targeting as much as $135 million.

Personal care products maker KDC/ONE Development Corp. was seeking to raise $857 million, selling 57 million shares for $13 to $15 apiece on Wednesday. The Quebec-based company didn’t price its IPO as expected, though.

Sterling Check Corp., which provides technology background and identity verification services for employers, was the one of three companies pricing U.S. IPOs Wednesday with less of a role in the consumer sector. It rose 17% in its debut Thursday after its $329 million IPO.

The listings come amid a seasonal boom in what was already a record year for IPOs on U.S. exchanges. Since Jan. 1, 800 companies including special purpose acquisition companies, or SPACS, had raised a combined total of more than $254 billion, according to data combined by Bloomberg. That compares with $180 billion in all of last year, which itself eclipsed earlier records, the data show.

Freshworks, Toast

Consumer and software companies have scored many of the year’s highest-profile listings. That includes software maker Freshworks Inc. and restaurant payments firm Toast Inc., which rose 32% and 56% respectively in their trading debuts Wednesday after pricing their IPOs above marketed ranges.

Last week, On Holding AG, the running shoemaker backed by Roger Federer, jumped 46% in its debut. Coffee chain Dutch Bros Inc. got a 59% jolt in its trading debut.

There are more such listings ready to come off the shelf. Authentic Brands Group Inc., now the owner of Reebok and Brooks Brothers, and shoe brand Allbirds Inc. are both lined up to go public.

Olaplex Holdings Inc., the high-end hair product brand, is seeking more than $1 billion in an IPO set for next week. Warby Parker Inc., the seller of direct-to-consumer eyewear, is set to debut through a direct listing by end of the month.

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