Guzman Y Gomez surges 37% in hottest Australian IPO in three years

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Guzman Y Gomez (GYG.AX), a Mexican food chain, delivered Australia’s best initial public offering (IPO) debut in three years, with shares surging over one-third on their first trading day. The Sydney startup’s stock opened at A$29.90, representing a 36% increase from the A$22 issue price, and closed slightly higher at A$30, signaling strong investor sentiment.

The IPO raised A$335.1 million ($224 million) by offering about one-sixth of the company to existing financiers and franchise owners, boosting the market capitalization to approximately A$3 billion from A$2.2 billion. This impressive debut marks the largest first-day gain by a large Australian company since 2021 and ranks as the third-best performing IPO in the country over the past five years.

Despite high interest rates and inflation impacting demand in 2022 and 2023, Guzman Y Gomez’s successful IPO signals positive investor sentiment. The company’s listing prospectus projected a net loss for 2024 but anticipated a profit in 2025, with a long-term goal to match McDonald’s current Australian store count within 20 years. This upbeat performance comes amid a challenging IPO market, where Australia has raised just A$98 million in IPOs so far in 2024, the second-lowest June half in over a decade.

Source: REUTERS

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