Papa Murphy’s Holdings Inc. set the terms for its initial public offering on Monday with the price between $11 and $13 per share.
The Vancouver, Wash.-based parent to the Papa Murphy’s Take ‘N’ Bake Pizza chain said it will offer 5.8 million shares of common stock, which would raise about $70 million at the midpoint, or $61.9 million after expenses related to the offering.
Underwriters will have the option to purchase an additional 874,999 shares to cover over allotments. At the high end, the IPO could generate up to $87.2 million.
Proceeds will be used to repay debt and for general corporate purposes, the company said.
Zoe’s Kitchen Inc., which held an IPO on April 11, also set its initial price in the $11 to $13 range, later increasing its target to between $13 and $15 per share. The fast-casual chain’s stock popped at $25.65 on the first day of trading and closed at $24.72 — roughly 65 percent higher than the offer price — indicating an investor hunger for fast-casual growth chains.
Known for its customizable pizzas that guests take home to bake in their own ovens, Papa Murphy’s has been owned by private-equity firm Lee Equity Partners LLC since May 2010.
With 1,418 units at the end of 2013 in 38 states, Canada and the United Arab Emirates, Papa Murphy’s is mostly franchised, with about 69 company-owned units. The company has estimated the brand has the potential of reaching 4,500 units in the U.S.
Papa Murphy’s recorded $785.6 million in systemwide sales in 2013, with same-store sales rising 2.8 percent over the prior year. The chain’s units have generated positive same-store sales growth in 35 of the last 40 quarters, averaging increases of about 4 percent over the last decade, the company said in filings with the U.S. Securities and Exchange Commission.
The company’s proposed NASDAQ trading symbol is “FRSH.”