wait.. was the IPO price $22 @lastever?

Not a bad debut for a stock that had a fair degree of negativity prior to listing, and was offered at ~38x pro-forma forward EBITDA.

Nothing makes sense anymore.. I'm just going to give up at this point and go start day trading Gamestop shares! :)

Yes it was $22 at IPO @Strawman. And all afternoon there have been large chunks ($100,000) changing hands at almost exacty $30, as it it were a bond ETF.

It’s not only a stellar debut, I’m wondering outloud if it’s some kind of staged event….

Is it ever! I still cant get over the removing lease costs in the prospectus numbers to show profitability

Pump pump pump the limit the liquidity by locking up the majority of stock and floating just enough to ensure oversubscription

Next step will be managing increases in liquidity right as index funds need to add GYG to indexes ie current owners start to sell out. Will be announced as needing to increase liquidity in market

I reckon you'll be able to buy it for much less in early 2025 but hey anything is possible

@Strawman im always amazed at how excited people get on ipo's. especially after a drought, remember NXL $5.80 ipo ultimately went to $12 (as i recall), +60% on first day, now $2.88,. lets wait until GYG report a few results.... that is my view (without having read the prospectus).

I imagine there will be a few bottles of the expensive stuff getting cracked tonight..

Too funny @Strawman :]

It's 2021 again, but with interest rates that are 4x as high. What can go wrong?

as someone said, the real test of mexican food is what happens the next day.

there is also ..

Buyback Capital on X: "$GYG https://t.co/mCudGJ9dsY" / X

Thank you @secondtake88 - that made my 'king day! Seriously funny!!

Guzman y Gomez co-founder Robert Hazan, and co-chiefs Hilton Brett and Steven Marks, all realised healthy paydays after the company listed on the ASX.

https://www.afr.com/companies/financial-services/guzman-y-gomez-founder-s-wealth-jumps-60m-in-first-seconds-of-trade-20240620-p5jng6

Guzman y Gomez founder’s wealth jumps $60m in first seconds of trade

Aaron Weinman, AFR Correspondent, Jun 20, 2024 – 5.16pm

A surge in Guzman y Gomez shares as it hit the ASX has delivered a $60 million bump to the fortune of the Mexican-themed restaurant’s founder, with Steven Marks and his family now sitting on a shareholding worth more than $225 million.

The former Wall Street hedge fund trader was not the only company insider to have their wealth skyrocket thanks to the successful IPO on Thursday. Guy Russo, the former chief executive of Kmart, Target and McDonald’s Australia, who is now Guzman y Gomez’s chairman, owns 5.6% of the company, with his holding worth $170 million.

Shares surged from the $22 offer price to $30 on the first day of trade amid strong demand from investors. Shareholders who had bought in before the IPO – including in a capital raise at a $1.76 billion valuation only two months ago – would be even more in the money. Guzman y Gomez closed with a market capitalisation of $3 billion.

Robert Hazan – who started the business with Mr Marks – has a 4.5% share in the company, which was worth about $136 million at the end of the day, while former McDonald’s executive Stephen Jermyn’s 3.8% stake popped to $114 million.

TDM Growth Partners, Aware Super and Barrenjoey’s private capital business all watched as their stakes in the company soared by hundreds of millions of dollars on Thursday after Guzman y Gomez raised $335 million through an initial public offering.

TDM’s 28% share swelled to approximately $858 million, while Barrenjoey’s roughly 10% stake popped to about $315 million and some 6% of Aware’s holding in the company was worth almost $185 million, according to an indicative statement of the largest 20 shareholders.

Barrenjoey bought an 11% stake from Magellan Financial for just $140 million two years ago. Barrenjoey executives who tipped into the firm’s private capital fund should also enjoy a windfall from the share sale.

Morgan Stanley and Barrenjoey will also share from a $9.2 million fee pool due to their roles as co-leads on the float. Lawyers Gilbert + Tobin, which advised Guzman y Gomez on the listing, earned $1.1 million, according to the company’s prospectus.

Guzman y Gomez’s shares ended $8 above its listing price, after investors piled into the biggest local float in the past three years. It is the largest float since APM Human Services hit the ASX in December 2021 with a market value of $3.3 billion.

Guzman y Gomez flagged its float plans on May 31, raising $335.1 million, with $200 million in proceeds going to the company. A week ago, Guzman y Gomez increased its offer by nearly $100 million, with its largest backer, TDM, further selling down. TDM and Barrenjoey have committed to a voluntary escrow until results next year.

Still, some market observers are wary about the company’s longer-term value. Richard Hemming, who authors the Under the Radar report, said the float was a success for the investment banking and stockbroking community.

“The fact is that they’ve been lining up to IPO for years. It’s in everyone’s interest for them to generate a 30% pop on the first day, which is what they’ve done,” Mr Hemming said.

“But it’s a long road from here at higher interest rates, which is why caution is required, certainly at current prices. How much expansion you’re paying for today.

“If you’re pricing it or valuing it expanding beyond Australia, there’s a lot of competition, and it will be compared against more mature and longer-lasting concepts. It might be that Mexican in Australia was a low-hanging avocado.

“One thing is for certain, after this IPO drought and with the amount of takeover activity, the bankers and private equity will need more floats.”

Guzman hits the ASX

• How Guzman y Gomez bungled its grand plans to be the next McDonald’s Documents filed with a California court reveal how ex-managers allege the Mexican-themed restaurant chain sent its boss to a “cult-like” life coach.
• Guzman y Gomez unveils $2.2b listing in bumper pay day for backers The Mexican-themed restaurant chain said there was “considerable demand” from pre-IPO investors, and the money would be used to supercharge growth.
• Chanticleer | The Warren Buffett question at the heart of Guzman y Gomez float The Mexican-themed restaurant chain’s founder is pitching big growth. He’s not an overnight success story, but the riches are there if he can make it work.
• Bears emerge as Guzman y Gomez’s blockbuster IPO nears Morningstar has told clients that the $22 initial public offering price is “too high” to what it considers fair value for the Mexican-themed fast-food chain.
• Investors scramble for Guzman y Gomez shares amid hot demand Sources said some investors interested in the $2.2 billion float received 10 per cent of what they had wanted, while others managed to grab 45 per cent.
• Street Talk | And the leases? Guzman y Gomez’s IPO docs may give ASIC heartburn There are plenty of questions about whether disclosures in the company’s prospectus gives investors a true picture of its outlook.

--- end of excerpt ---

Haven't done a thing on it - as its not going to trade on fundamentals after it lists with all the main brokers spruiking it. Seems like most only got 10% of their allocations so might be a good pop on listing if that's true.

I have my popocorn ready - given the AFR stirrings below:

Haters not invited on the Guzman y Gomez burrito rocket

Mark Di StefanoColumnist

Well, the ears of our spies pricked up at Wednesday’s Morgan Stanley conference towards the back-end of a panel featuring Guzman y Gomez founder Steven Marks.

It wasn’t even something Marks said, but it came from his co-panellist Paul Bassat, the co-founder of Seek and wielder of the Square Peg.

Richard White, Steven Marks, Paul Bassat and Morgan Stanley’s Andrew Hunter at the Morgan Stanley Summit in Sydney on Wednesday.  Oscar Coleman

“I’ve had a lot of amusement in the last week reading Rear Window about Guzman y Gomez being expensive,” Bassat said.

“I’ll tell you, if it’s the choice between some great investors like Capital and Cooper and Aware and a bunch of other folks and some guys who write a column, a gossip column, on the back page of the Financial Review, I know whose opinion I’m going to listen to.”

There’s another happy reader. So, setting aside the sneering of our station – we are proud gossip columnists! We are at home on the back page! – let’s start with something we can agree on: we wouldn’t take investment advice from ourselves either.

But surely that is hardly what we’ve been doing by pointing out that the accounting that underpins Guzman y Gomez’s $2.22 billion valuation in next week’s blockbuster is more rubbery than the tendies in an $18.60 crispy chicken bowl.

That the company’s EBITDA multiples are tough digesting, sometimes including lease depreciation, other times including share remuneration, and (unhelpfully) not both at the same time. Relevant numbers are scattered across the 200+ page prospectus like a black-gloved worker flinging shredded cheese.

Is the company aiming to trade at 32.5 times EBITDA? Or 38.2 times? Or 47.5 times? Honestly, like really, it depends. To say nothing of the fact, Morningstar put out a note before Bassat went on suggesting Guzman y Gomez could be overshooting its $22 share price by as much as $7.

Bassat doesn’t go into it. Instead, the founder-cum-investor seems to blanket-concede that the “great” companies (like Guzman y Gomez) are expensive, and that is kind of the point.

“Great businesses are always expensive, that doesn’t mean all expensive businesses are great,” he added.

Well, isn’t that one of those profound-sounding statements that gets the people going. It gives young-VC airheads goosebumps. This isn’t just a pithy motto from a great man of early stage start-ups. This is your next LinkedIn content! (It means precisely nothing.)

Leather jacket and the hoodie

Meanwhile, the image adjacency is simply genius. There’s the haters out there, and the believers in here. If it’s good enough for Aware Super and Cooper and Capital Research Global Investors, you don’t need due diligence. If you’re offered a ride on the rocket ship, don’t argue over the seating chart.

In fact, the event exploring the “journey of a founder” was hosted by Andrew Hunter from the investment banking division at Morgan Stanley, which will split 2.5 per cent of the money raised in underwriting with Barrenjoey. Little wonder it placed Marks on stage next to WiseTech’s Richard White, the OG tech wizard who’s seen this set-up of doubters before.

“Andrew, you were part of (WiseTech’s) IPO?” White replied. “I remember Street Talk a couple of days before the book build – ‘way too expensive’, ‘unsustainable’.”

“I just heard the same thing!” Marks interjected to laughs from the crowd.

One wears a leather jacket. The other wears a hoodie. One is a high-margin SaaS platform that’s digitising the global logistics ecosystem. The other is an Australian guy whose growth ambitions is getting as big as Maccas, and selling Mexican food to Americans. Look, this is the same story.

There are surely a host of reasons why Bassat would go in to bat for the business. He’s a pumper of the “founders as masters of the universe” narrative. He invests and sits on the board of Rokt, whose founder Bruce Buchanan sits on the board of Guzman y Gomez. He’s an ally.

But also there’s something strange about how the Mexican chain is approaching the public market. With so few shares being issued, it has the look and feel of a venture capital up-round.

Guzman y Gomez last raised money from new and pre-existing investors in April of this year. Then, the company secured a $135 million financing round, adding (new) investors: Cooper, Hyperion Asset Management, Firetrail and QVG.

Now the company’s raising at a valuation 13 per cent higher. So what’s changed in the business in two and a half months? The company argues there was a discount then to account for the illiquidity that comes with investing in a private company.

Still, were these investors in April lured by the promise of a nice quick bump on their funds for an imminent IPO? They’ll be holding and some cases increasing their stakes when the stock goes public next Thursday.

They could get a nice little EOFY mark-up (and maybe some fees that come with those gains). Que rico!

Haha thanks @Mujo I will join in with the popcorn

I personally like the food, given the choices we have in Australia, and am not surprised they are successful here. However trying to expand into the US, where I’ve heard they have a few Mexicans and Mexican restaurants already, might be a bit harder.

@NewyRookie Today I was listening to this Stocktake pod cast episode. It was a good listen on this topic: Click here

Spoiler alert: Nick Cummings, Angus Donohoo and Gaurav Sodhi all liked the food.

None of them will be investing straight up. Lots of hype. However they seemed to be keen to keep an eye on it once the dust settles.

Buenos noches

Yes great listening. My takeaway (no pun intended) was that a high quality business with potential to do well particularly in Australia but almost certainly overpriced and without saying it in a legally liable way they suggested the float is compromised by unreasonable reporting non gaap accounting… why would you strip out lease costs before reporting profit for example?

The price if the IPO seems crazy to me.

Saw this on twitter, which says it well..

I wouldn't touch it with a barge pole.

With a real  "EV/EBITDA" of closer to 50, I might give it 10 minutes attention at $10-12. But this is a decade away from being able to demonstrate its another $CMG (EV/EBITDA 38.5,..so also likely overvalued)

And to do that it probably needs to take on $CMG in its home market … good luck with that!

Its about the only fast food I ever eat. But that’s the only $ they’re getting from me. Happy to take a look when it has 2-3 years public results behind it.

Seems like this GYG float is a good excuse to give holders before the IPO some exit liquidity.

Buyer beware.

Yeah, I skimmed the prospectus a few weeks ago. It was pretty clear within the first few minutes that I was not the target audience. Under the spin there seems to be a reasonable Australian business. Store margins are pretty good and, well, you don't get to $800m-$900m in sales unless you are doing something right, but there's a lot of mouths to feed at the corporate level. I wouldn't put any faith in backing the US business to ever make a profit, I really just think that beach head has been established to pump the tyres (tires) of the IPO – nothing sexier than saying we are so good we can even sell ice to the Eskimos. Similarly, I wouldn't put much faith in the 1,000 stores in Australia being realistic and if they did manage it, the economics of the 1000th store would be vastly different to what they present today. So, yeah, the valuation is nonsensical. I'm not sure that means public markets are a ponzi scheme though lol.

This chart I think illustrates just how silly the 1000 store target looks in real life.

I'm already a supporter whether I like it or not, as my son has a GyG burrito on one of my credit cards 4 or 5 times/week, and my wife loves the same thing in a bowl (those compostable cardboard bowls they use which end up in our garden waste bin along with their wooden forks/sporks).

I personally wouldn't invest in them, although I was briefly indirectly invested in them through exposure to MFG back when I held MFG and they held an initial stake in GyG during their initial Australian roll-out (pre-IPO); MFG have fully exited GyG now - they sold their stake after Hamish imploded and Chris Mackay tried to reduce MFG back to what they once were - concentrating on their core overseas investments - see here: Magellan buys 10pc stake in Mexican food chain Guzman y Gomez for $87m (afr.com) [22-Dec-2020] and here: Magellan exits Guzman y Gomez - Financial Newswire [09-May-2022] and here: Magellan Financial (ASX:MFG) completes Guzman sale for $140m | Finance News Network (finnewsnetwork.com.au) [24-June-2022]. Hamish is quoted in one of those last two articles about the exit, but he'd already stepped down from the MFG Board in March 2022 and was on indefinite leave of absence having stepped down as chief investment officer (CIO) of Magellan Financial Group (MFG) in Feb, 2022.

However - back to Guzman y Gomez - they are popular here in Adelaide, we use their app to pre-order, and their drive-thrus are usually packed so we go in to pick up the orders, which are always ready for us, so they seem to have a good system that works, and good quality food, that also tastes good. My son is training (Cert III/VET course) to be a personal trainer so he looks carefully at everything before consuming it in terms of protein vs carbs, fibre etc., and Guzman gets a tick from him.

Again, not my area of investment expertise; I don't tend to invest in fast food or restaurants in general, but I can see the appeal. Over here I reckon every GyG is attached to a service station, so they already have premium locations, and thru-traffic, people can fuel up their vehicles and themselves. It's a smart way to roll out a new brand. If you contrast that with Opporto, the Portugese (peri peri) chicken place, they are mostly in standalone buildings, their drive-throughs are usually empty, and when I've used them on the odd occasion, it usually took them about 10 minutes to cook the food after we ordered it, so it never pays to leave the engine running at Opporto, and Guzman's Mexican food is quicker and tastes way better. Guzman also cook their food to order, but they are quicker, and they have an App for pre-ordering which is easy to use and works.

In terms of their direct competition (quickly prepared [fast] mexican food), using a sample size of one (my son), Sam says that Zambrero, Zapata's and Salsa's Fresh Mex Grill are all vastly inferior to GyG. Tried them all, didn't like them, will only eat Guzman y Gomez.

Salsa's is a local roll out owned by "Retail Zoo" which is majority owned (and founded) by Janine Allis, the creator of Boost Juice. The "Retail Zoo" holding company (started by Allis and her husband, after the success of Boost Juice, with the intention of acquiring other fast food franchises) acquired Salsa's in 2007 (4 outlets only at that point), then the 20-outlet Cibo Espresso coffee and cake chain in 2012 for $15 million; Retail Zoo also started an American-style hamburger diner chain called Betty's Burgers & Concrete Company in 2014 (source: Wikipedia) so they're not ALL about healthy food.

And back to GyG again - Guzman seems to have a modern take on fast food - clean/green and healthy, compostable packaging, freshly prepared ingredients, healthy food, well, some of it is, and an App that works - yet they don't claim to be a technology company - yes, I'm looking at you Don Meij!)

Ha. Just saw this. I have known Michael for most of my life. And his twin brother!

He was a gun at modelling (left me for dead). Worked at Solomn Smith Barney for a while. Then went out on his own. He has some great models he has built over the years.

Oh and he was the best skateboarder I have ever skated with.