NEW YORK – Shares of famed jeans maker Levi Strauss & Co. vaulted 32% in their first day of trading on Thursday, the latest sign of a burgeoning IPO market that is on pace to be one of the best ever.
Levi shares, trading under the ticker symbol LEVI, had already been priced above their target range at $17 each. They closed at $22.41, giving Levi the third-biggest first-day jump for a big, nontechnology initial public offering since 2015, according to Dealogic.
This year is expected to be one of the most hectic for new issues, with banner names such as Levi, Lyft Inc., Uber Technologies Inc., Pinterest Inc. and Slack Technologies Inc. finally splashing into the public markets. Other highly valued startups are also waiting in the wings to see how those IPOs go and could jump into the mix.
Levi isn’t the typical hot IPO narrative. It is a long-established company with roots dating back to the mid-1800s. The company is solidly profitable, notching income of $285.2 million for its fiscal year ended in November, up from $284.5 million a year earlier. It generated $5.6 billion of revenue in its latest year. It is also Levi’s second tour as a public company, after the Haas family, descendants of company founder Levi Strauss, took the jeans company private in 1985.
But the company does have at least one hallmark of recent IPOs: Dual-class shares. The family members will hold about two-thirds of the retailer’s outstanding stock, but will ultimately control 99% of the voting power.
Dual-class structures have become more common in recent years, with new investors willing to give up voting power in exchange for hopeful returns on high-growth stocks. Levi Chief Executive Chip Bergh said in an interview that he explained to investors during the company’s roadshow that the family members are long-term investors whose interests are aligned with public stockholders.
The backdrop for IPOs is highly favorable, with stocks trading near record highs and with relatively low volatility. Market concerns that arose during a December stock swoon have largely abated. And with concerns over a potential recession looming in the background, companies may be eager to go public, generating capital at lofty valuations and establishing themselves on the public markets.
If enough highly valued companies choose to tap the public markets, 2019 could be a record-breaking year for IPOs in terms of dollars raised. It could top 2000, the high-water mark, when tech companies raced to cash in on lofty valuations at the height of the dot-com boom.
Much of the proceeds from Levi’s offering are expected to go to family members. They are expected to receive $462 million, while $161 million goes into the company’s coffers, excluding the underwriters’ allotment.
In an interview, Bergh said the company would be on the lookout to buy back franchisees, licenses and distributors around the world. He also said the company would consider acquiring other brands as it seeks to expand into footwear and accessories.
Still, he cautioned that deals are difficult to pull off. “There has to be the right culture fit,” Bergh said, adding that one of his strategic goals was to expand beyond the company’s core business of selling jeans and khaki pants.