Jersey Mike’s, Cumberland Farms Join Swelling IPO Pipeline in US

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**SPEAKER_2** (0:08)
You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:14)
We've got Anthony Hughes with us, a Bloomberg News, US. Equity Capital Markets Reporter. He joins us here in the Bloomberg Interactive Brokers Studio. I want to talk about what Norah says are some delicious submarine sandwiches.

**Norah Mulinda** (0:25)
Oh yeah.

**Tim Stenovec** (0:25)
Yeah, you like these jersey mics.

**Norah Mulinda** (0:26)
Jersey Mike's is where it's at.

**Tim Stenovec** (0:28)
And we'll talk about Cumberland Farms, but the moment right now for IPOs, something is happening here.

**Anthony Hughes** (0:34)
Yes. Well, SpaceX obviously was the deal that got all the attention and it's traded reasonably well. I mean, I know there's been a lot of stories saying how it's pulled back and that's been a negative, but it's still considered a pretty successful transaction. I was just looking at the stats and if you look at the number of IPOs this year, and we break it up where we'll take away the SPACs and we'll look at just the big deals, the $50 million plus deals, we can go $100 million plus deals, but the average return from this year's IPOs is about 19 percent for the US IPOs, and that's about double what the market's doing if you look at the S&P 500 So that's a good year for the banks. But there's a lot of IPOs, but we're not 2021 proportions by any stretch. We have a lot of sectors that are not participating. If you look at the IPOs that have done well, I was just looking at this earlier, it's really been companies that are AI adjacent, some of them private equity backed. And Forgent, which is a company that has done three follow on offerings since they went public in February, which is remarkable. That's one of the best IPOs of the year. That's a private equity backed company that sells powered distribution equipment, the most boring thing. But it's exciting because it's-

**Tim Stenovec** (1:39)
Big for AI.

**Anthony Hughes** (1:40)
Exciting because it's exposed to the AI narrative. And there's been a couple of other big private equity deals like Madison Air and Inio that have both done reasonably well. And then we've had a bit of a rebound in the biotechs where some of those have done well, but they're smaller deals. But areas like this where we're talking about Jersey Mike's and Cumberland Farms or EG Group as it's also known.
Consumers been tough. So if you look at the consumer stocks, they're actually underperformed the overall market here materially this year. The couple of companies that have gone public that were consumer stocks, there's Once Upon a Farm which did okay, but not a huge win. But Suja Juice was a smaller one. That was not a good IPO. We haven't seen Suja Juice which is the fancy juice you'll find in Whole Foods. That one didn't do too well. There hasn't been that many consumer IPO. So I think overall the consumer part of the market is not that vibrant compared to say, it's analogous to the fact that the whole economy is somewhat being driven by all the action in AI, not in this sort of, not so much in consumers where we've got inflation which is kind of putting a squeeze on it. I think even these companies that have filed today, they have some pressures around inflation.

**Norah Mulinda** (2:57)
Is it a lot of competition right now when you think about any sort of companies that are IPO-ing that aren't tech? I feel like there's been so much focus on any sort of AI related trade, any sort of AI related IPO. We've got some big names just in focus this year. What about any other sectors? Anywhere else getting love? You mentioned consumer hasn't been doing too well in the equity side, but curious if there's been any other names that you've been tracking outside of tech.

**Anthony Hughes** (3:22)
Yeah, well, the interesting thing about Jersey Mike's is it's majority controlled by Blackstone, which has a lot of companies that wants to take public this year. And some of them don't quite fit the themes that are hot. And they're not necessarily AI adjacent. They've had a couple of software companies that they got one away and they've got another that they've been trying to get away. Software is not the place to be, obviously, because of AI disruption.
But in terms of areas like consumer, I think a business like Jersey Mike's looks like it sort of has its own strengths, which is sort of a bit beyond this sector as a whole. I mean, they got very good same store sales growth and growth in store growth, which means they got very consistent double digit growth overall. And that's a good formula. They're not gonna have too much debt. The thing with these private equity deals, they're not gonna have too much debt.