Dave & Buster’s Prices I.P.O. at Bottom of the Range

Dave & Buster’s Prices I.P.O. at Bottom of the Range

By WILLIAM ALDEN
OCTOBER 9, 2014

Dave & Buster’s Entertainment, the restaurant and arcade chain, is set to make its public market debut after eight years of private ownership.

The company priced its initial public offering on Thursday evening at $16 a share, the bottom of an expected range of $16 to $18. It raised $94.1 million and achieved a valuation of $625.4 million.

The shares are expected to begin trading on Friday on Nasdaq under the ticker symbol PLAY.

The offering is the culmination of a long journey for Dave & Buster’s, which has been owned by a succession of private equity firms and previously sought to go public in 2012. Its current owner, the private equity firm Oak Hill Capital Partners, is not selling shares in the I.P.O. and will remain the majority shareholder.

Founded in Dallas in 1982, Dave & Buster’s has grown into a chain with 70 stores in the United States and Canada. It stands out among comparable chains in that customers can play arcade games after feasting on sandwiches and steaks. The company, though it has a history of losses, turned a profit of $2.2 million in its fiscal year that ended in February.

Dave & Buster’s says it plans to use the proceeds from the I.P.O. to reduce its substantial level of debt. Putting aside the effects of the offering, the company reported $529 million of debt as of Aug. 3.

The I.P.O. is also being used to enhance employee loyalty. Stephen M. King, the chief executive, announced last month that 2.5 percent of the shares on offer would be set aside for employees, “at the same price, and at the same time, as Wall Street,” through a brokerage firm called Loyal3 that caters to individuals.

Dave & Buster’s spent an earlier period as a publicly traded company from 1997 to 2006, before it was bought for $257 million by a private equity firm called Wellspring Capital Management. Four years later, Wellspring sold the company to Oak Hill for $570 million.

Under Oak Hill’s ownership, Dave & Buster’s filed for an I.P.O. in 2011 but ended up canceling the plans the following year, citing “continued volatility” in the markets.

Since then, the company has remodeled some stores and opened new ones, helping to improve its finances. “It’s been good that they waited” before going public, said Kathleen S. Smith, a principal of Renaissance Capital, which manages an exchange-traded fund that tracks I.P.O.s.

The underwriters of the I.P.O. include Jefferies, Piper Jaffray, William Blair, Raymond James and Stifel