6 April, 2015 /Woori BMO Group/ Analysts at the respected wealth management firm Woori BMP Group have reported today that Party City Holdco Inc, the largest retailer of U.S. party goods, is expected to be valued at nearly $2 billion in its initial public offering, the first this year by a U.S. retailer.
Backed by buyout firm Thomas H. Lee Partners LP, the company operates 900 party superstores in the U.S. and Canada that sell party supplies including everyday paper and plastic tableware, metallic and latex balloons and gifts.
Jay Ritter, a professor and IPO expert at the University of Florida, said speciality retailers are successfully competing with online retailers because of the in-store experience they offer.
People prefer shopping at a speciality store like Party City mostly because it offers products that have unique party themes that can be tailored to an event, Ritter said.
“Party City announced an 11% rise in sales for the year ending December 31 to around $2.27 billion. Net revenue jumped from $4.2 million a year earlier, to $56.1 million,” reported Christian Harper, Director of EMEA Wealth Management at Woori BMO Group.
In the United States, IPO activity started slow this year, with the number of first-quarter transactions dropping to their lowest level since 2010. Etsy Inc, which runs a website selling handmade goods and craft supplies, is expected to raise about $267 million next week at its IPO.
“Founded in 1947, Party City plans the selling of 21.9 million shares to be sold between $15 and $17 per share, up to $372 million,” added Harper of Woori BMO Group.
The company grew through Party City, Party America Corp, Factory Card & Party Outlet, Party Packager, and iParty Corp acquisitions. Party City had nearly $2.18 billion of debt as of December 31.
“The company, which operates in the $10 billion retail goods industry, has stated that it expects to open about 30 stores in the United States and Canada each year starting this year,” reported Andrew Williams, Director of Institutional Equity at Woori BMO Group.
In 2012, Thomas H. Lee acquired a majority stake in Party City from private equity peers Advent International Corp, Berkshire Partners LLC and Weston Presidio in a $2.69 billion deal. Thomas H. Lee currently holds about 69 per cent of the stake, while Advent holds around 24 per cent of the company’s interest.
The offering is led by Goldman Sachs, Merrill Lynch, Pierce, Fenner & Smith, Credit Suisse, and Morgan Stanley. The company, which filed for the IPO last year, plans to list on the New York Stock Exchange under the ticker “PRTY”.