Burlington Coat Factory Joins The IPO Rush With $175 Million Target
Burlington Coat Factory said on Thursday (June 27) that it's going public again. The 503-store chain filed paperwork for an initial public offering that it hopes will raise $175 million, according to the Wall Street Journal.
Burlington Coat was a public company until 2006, when it was taken private by Bain Capital as part of a wave of leveraged buyouts that included Neiman Marcus, which announced its own IPO on Monday (June 24) after being bought in 2005 by TPG Capital and Warburg Pinkus.
Both chains face a similar problem: Private equity firms usually like to hold a retailer for about five years and then sell it, so their investors can be paid off. But the recession and slow recovery have meant the chains bought in that mid-decade buying spree (for Bain alone, the list includes Toys"R"Us, Guitar Center and Michaels Stores) are now long overdue to be flipped.
In Burlington Coat's case, $175 million won't make much of a dent in the $2 billion that Bain paid seven years ago, but it will begin the process of raising some cash in a way other than borrowing. In 2011 and in February of this year, Burlington Coat borrowed to pay more than $630 million to its owners. That debt has to be paid off somehow.
According to the Journal, the stream of retail-chain IPOs is likely to increase in the second half of the year, with bankers pitching the stock offerings as part of a continued recovery in consumer spending. Whether or not this really is the perfect point in the recovery for regular investors to jump in, it's clear that the 2005-era enthusiasm of private equity firms for retail has run its course—and then some.