CINCINNATI - The region's newest public company, AdvancePierre Foods, is a Blue Ash-based maker of “restaurant-style sandwiches,” including the All Beef Jalapeno Cheeseburger, Philly Cheesesteak and Monterey Style Grilled Chicken.
Investors seem to have a healthy appetite for the stock.
Trading under the ticker symbol APFH, shares in AdvancePierre Foods Holdings Inc. rose 13 percent to $23.89 in its first three hours as a public company Friday.
“It bodes well for the company,” said Victor Lassandro, managing director and senior portfolio manager for Riverpoint Capital Management. “It’s a good start in kind of a weak IPO market.”
It's the first local IPO since Milacron Inc. raised $293 million last year.
Initial public offerings are down more than 50 percent so far in 2016, in terms of the number of IPOs filed (68) and the amount of money raised ($7.7 billion) by companies who ultimately compete their announced offering, according to data from Renaissance Capital.
AdvancePierre Foods Holdings Inc. raised $223 million by selling 11.1 million shares at $21 each in its IPO Thursday. The company’s investors, including the private equity firm Oaktree Capital Management, sold another 7.5 million shares.
Oaktree, which bought AdvancePierre out of bankruptcy, remains the company’s majority shareholder, with 51 million shares worth $1.2 billion a Noon Friday.
AdvancePierre will use proceeds of the offering to pay off some of its $1.3 billion in debt.
Oaktree has pursued a combination of cost control, price increases and acquisitions to grow AdvancePierre into one of Cincinnati’s largest privately held companies, with $1.6 million in revenue for the 12 months that ended April 2. Its IPO filing showed the company booked a $37 million in profit last year, reversing its 2014 loss of $38 million.
Lassandro said Oaktree’s plans for continued involvement in the company is probably a factor in how well the IPO did, generating enough demand for the stock to boost its value after the offering.
“They’re pretty good managers,” he said. “Oaktree’s backing probably helped.”
The rising stock price delivered an instant windfall for the board and management team at AdvancePierre Friday morning.
As a group, the eight executives who reported ownership stakes Friday in the new public company saw the value of those shares increase by a combined $11.9 million. Director shares increased $1.8 million in the first three hours of trading.
CEO John Simons led the pack with a $5.8 million gain on his 2 million shares. Board Chairman Richard Dean Hollis scored a paper profit of $1.3 million 447,417 shares.