Not a Lot of Sizzle in Dave & Buster's IPO

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Published: October 10, 2014 11:10 am

Last Updated: October 10, 2014 11:26 am

Source: courtesy of Dave & Buster's Entertainment Inc.

Dave & Buster’s Entertainment Inc. (NASDAQ: PLAY) priced 5.88 million shares at $16 for the company’s initial public offering (IPO) Friday morning. Shares opened at $16 and rose to a high of $18.00 before pulling back to around $16.80.

The IPO price was set at the low end of the expected range and the company, which features dining and entertainment aimed primarily at adults, raised $94 million at a valuation of about $600 million. Oak Hill Capital Partners retains ownership of about 81% of the company.

Underwriters for the offering are Jefferies, Piper Jaffray, William Blair, Raymond James, Stifel and Loyal3 Securities. The underwriters have been granted a 30-day option on an additional 882,352 shares.

Dave & Buster’s was founded in 1982 and traded publicly from 1997 to 2006, when it was acquired by private equity firms that sold it to Oak Hill in 2010. Oak Hill tried to take the chain public in 2011, but withdrew the effort in 2012 citing market conditions.

IPOs for casual dining chains have been solid this year, with Zoe’s Kitchen Inc. (NYSE: ZOES) up 31% and El Pollo Loco Holdings Inc. (NASDAQ: LOCO) up more than 50% since their IPOs. Dave & Buster’s competes not only with restaurants, but with companies like SeaWorld Entertainment Inc. (NYSE: SEAS) that offer entertainment experiences, and perhaps even casinos.

The shares were trading at $16.75, up 4.6%, about an hour after trading began Friday. The range is $15.89 to $18.00, and volume thus far was about 3.5 million.

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