June 30 (Bloomberg) -- Dunkin’ Brands Group Inc., operator of the Dunkin’ Donuts coffee chain, may set terms for its initial public offering as soon as next week, said two people with knowledge of the situation.
Taken private in 2006 by Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP, the company will likely set a price range for its shares and kick off meetings with investors after the July 4 holiday in the U.S., said the people, who declined to be identified because the information is private.
Dunkin’ follows private equity-backed companies such as HCA Holdings Inc. and Kinder Morgan Inc. in returning to the public market this year after leveraged buyouts. Private equity owners have completed the biggest U.S. IPOs in 2011 as a U.S. stock market near a three-year high increased investors’ demand for companies acquired through debt-fueled acquisitions before credit markets started to freeze four years ago.
“Private equity IPOs this year have outperformed,” said Kathleen Smith, a principal at Renaissance Capital LLC, an IPO research and investment firm in Greenwich, Connecticut. “That’s an encouraging sign for this IPO, and I do think investors have been awaiting it.”
HCA, the Nashville, Tennessee-based hospital chain, gained 9.2 percent through yesterday since owners including KKR & Co. and Bain brought it public in a $4.35 billion IPO in March. Nielsen Holdings NV, the television ratings company owned by Blackstone Group LP, Carlyle, KKR and Thomas H. Lee, rose 33 percent since its $1.89 billion IPO in January. Initial offerings in the U.S. overall have returned less than 4 percent.
A Broader Menu
A record $1.6 trillion in leveraged buyouts were completed from 2005 to 2007, according to Preqin Ltd., a London-based research firm.
Bain, Carlyle and Thomas H. Lee paid about $2.43 billion five years ago for Dunkin’, which competes with coffee chains such as Starbucks Corp. and Canada’s Tim Hortons Inc.
“They’ve really expanded the brand over the past years,” said Peter Saleh, a restaurant analyst at Telsey Advisory Group in New York. “They have a much more broad menu.”
The chain has introduced several menu items this year to bring in customers during the slower afternoon period. In April, the restaurant began selling so-called hearty snacks including apple pies, stuffed breadsticks and bagel twists.
Dunkin’ filed on May 4 with the Securities and Exchange Commission to raise as much as $400 million in an IPO. The stock will trade on the Nasdaq Stock Market under the ticker symbol DNKN. Michelle King, a spokeswoman for the Canton, Massachusetts-based company, declined to comment.
Proceeds will be used to repay debt, according to regulatory filings. The company had about $1.8 billion of net long-term debt as of March 26. The offering is being led by JPMorgan Chase & Co., Barclays Plc, Morgan Stanley, Bank of America Corp. and Goldman Sachs Group Inc.
Sales at Dunkin’ Brands increased 9.3 percent to $139.2 million in the three months ended March 26 from a year earlier, according to the company’s regulatory filings. The company booked a net loss of $1.72 million, compared with a gain of $5.94 million in the year-earlier period.
The doughnut chain has more than 16,000 locations in 57 countries under the Dunkin’ Donuts and Baskin-Robbins brands, according to the filing. Bill Rosenberg founded his first restaurant in the 1940s, which was later renamed Dunkin’ Donuts.
--With assistance from Leslie Patton in Chicago. Editors: Elizabeth Wollman, Donna Alvarado
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