Dutch Bros. Rates IPO Above Expectations; the share starts trading on Wednesday

Dutch Bros. is about to make its debut on Wall Street.

The southern Oregon drive-through chain valued the shares at $ 23 Tuesday afternoon for its much-anticipated IPO, $ 3 above the high end of the range the company predicted for the week. last.

This suggests that institutional investors were eager to buy the stock, and the higher offer price increases the amount Dutch Bros. will raise from the IPO to over $ 550 million. The offering price indicates that Wall Street values ​​the company at $ 3.8 billion, instantly making it the seventh most valued company in Oregon.

Another test awaits Wednesday morning, when the stock begins trading on the New York Stock Exchange under the ticker symbol “BROS”. Dutch Bros. will be watching if its stock gets a further raise above its $ 23 offer price, as is usually the case with new listings.

The chain of coffee stalls that started with a single cart in the tiny Grants Pass now has more than 480 stores, stretching from Washington state to Texas. Dutch Bros., still based at Grants Pass, is aiming to one day reach 4,000 stores nationwide.

Wednesday’s offer is Oregon’s first substantial IPO – raising at least $ 100 million – since 2004. And it’s the biggest action debut in state history, reflecting at both the high expectations facing Dutch Bros. and the huge rise in Wall Street valuations over the past decades.

The slowdown in new offerings reflects Oregon’s transition to an outpost economy, with jobs dominated by large out-of-state companies including Intel, Adidas, Daimler, Amazon and Walmart. All have major operations in Oregon, but their headquarters are elsewhere.

However, the state’s economy continued to grow rapidly, and now large local businesses are emerging as well. Portland vacation rental management giant Vacasa plans to go public later this fall by merging with a publicly traded investment fund.

Dutch Bros. sales are growing strongly, up 27% last year to $ 327 million. But its profits are slim, just $ 5.7 million in 2020, obviously reflecting the money the Oregon company has spent to fuel its growth.

If this investment pays off, Dutch Bros (pronounced ‘bros’, not ‘brothers’) could become a major consumer brand, known both nationwide and in its home state, where it enjoys a fast follow-up from dedicated clients who call themselves the “Dutch Mafia”.

With a menu of shakes, cold brews and highly caffeinated energy drinks (Dutch Bros. Blue Rebel energy drinks accounted for nearly a quarter of the company’s sales last year), Dutch Bros is nowhere near. to be a traditional coffee business. She takes pride in her customer service and her youthful image.

However, any small business faces obstacles as it grows. Already, Dutch Bros. IPO records have revealed that the company has struggled with its internal accounting as it lacks staff with experience in keeping the books for an increasingly complex organization.

And Dutch Bros. will face intense competition, from other regional chains and established coffee brands, as it seeks to find its way into new markets.

Dutch Bros. plans to use the proceeds of its IPO to pay off nearly $ 200 million in debt and fuel the company’s growth. He will set aside 1% of the money for charitable contributions, to be repaid over 10 years.

The public offering makes Dutch Bros. co-founder and chairman Travis Boersma a billionaire with a 43% stake in the company worth more than $ 1.6 billion at Tuesday’s offering price. However, he controls 74% of the voting shares, thanks to an unusual structure that gives his shares more votes than those held by ordinary shareholders.

– Mike Rogoway | [email protected] | Twitter: @rogoway |