Cava Soars in IPO — Reaching $4.7 Billion Valuation

Mediterranean restaurant chain CavaGroup posted a $4.9 billion valuation in a stellar market debut on Thursday, signaling that the IPO market was gaining momentum after pausing in 2022.

Shares opened at $42 each on the NYSE, nearly double its IPO price of $22. The stock closed at $43.78, up 99%. Cava sold approximately 14.4 million shares in the offering, raising $318 million.

Investors are warming up to IPOs this year after a volatility-fueled 2022 curbed appetite for new listings and fueled risk-averse sentiment.

“The fact that CAVA is unprofitable and is generating this level of interest is certainly an important development,” Matthew Kennedy, senior IPO market strategist at Renaissance Capital, told Reuters, adding that IPO activity gradually slowed in the second half of the year. will normalize.

Last month Kenvue, Johnson & Johnson’s consumer health company, completed its largest IPO since Rivian Automotive’s IPO in 2021.

The fast-casual restaurant sector has posted strong sales in recent months despite concerns about an impending recession in the United States.

We think the markets always welcome stories of long-term sustainable growth, especially brands that define categories, as we try to define the Mediterranean category, said Cava co-founder and CEO Brett Schulman.

So far, publicly traded peers such as Chipotle Mexican Grill and Shake Shack are each up more than 48%, outpacing the rise in shares of fast food brands McDonald’s and Restaurant Brands International.

Founded by three friends with Greek roots Ted Xenohristos, Ike Grigoropoulos and Dimitri Moshovitis, Cava opened its first restaurant Cava Mezze in Rockville in 2006.

It began selling its signature dips and spreads in local supermarkets within two years of establishing its first outlet.

JPMorgan, Jefferies and Citigroup were joint lead book-running managers for the Cava offering.