Oak Hill Nears IPO For Dave & Buster’s

Target: Dave & Buster’s Entertainment

Price: $108 million

Sponsor: Oak Hill Capital Partners

Financial Advisers: Goldman Sachs, Jefferies, Piper Jaffray

Dallas-based Dave & Buster’s is expected to price its offering on Oct. 4 and trade the next day, two sources told sister Web site peHUB. Dave & Buster’s set the terms for the IPO last month. The restaurant chain is offering about 7.7 million shares at $12 to $14 each via bookrunner Goldman Sachs. Jefferies and Piper Jaffray are also bookrunners on the deal, according to a regulatory filing. The underwriters have the option to buy another 1.2 million shares.

The offering comes two years after Oak Hill Capital Partners bought Dave & Buster’s in a deal valued at $570 million. The seller was Wellspring Capital Management (which itself had tried to take Dave & Buster’s public). Dave & Buster’s plans to trade on the Nasdaq under the ticker “PLAY.”

Founded in 1982, Dave & Buster’s is known for more than just its food, which includes “Mountain O’ Nachos,” buffalo wings as well as steaks and ribs. Dave & Buster’s also offers arcade games, such as “Dance Dance Revolution,” and older games like “Ms. Pac-Man” to entice customers. The company operates 59 locations across 25 states and Canada.

The restaurant chain initially filed in July 2011 for an IPO that was slated to raise as much as $150 million. At its current range, Dave & Buster’s could raise about $108 million at the high end.

Oak Hill invested $240 million equity in the deal, sources have told peHUB. Oak Hill currently owns just about all, or about 95 percent, of Dave & Buster’s, the regulatory filing said. The firm doesn’t appear to be selling shares in the offering but Oak Hill’s stake will fall to about 68 percent after the IPO. This is typical; buyout firms usually don’t sell much of their holdings in IPOs but wait for secondary offerings to offload stakes.

Last year, Dave & Buster’s signaled it might return some cash to Oak Hill. Dave & Buster’s in February 2011 said it would sell some senior notes and use the $100 million in proceeds to either pay a dividend to Oak Hill or buy back stock from the firm. According to a Sept. 24 SEC filing, Dave & Buster’s used the $100 million to buyback stock and to pay debt issuance costs. It’s not clear if Oak Hill received anything in a dividend. If they did receive the $100 million distribution, Oak Hill would have made back 40 percent of its investment, peHUB reported last year.

Officials for Oak Hill declined comment. Dave & Buster’s didn’t return calls for comment.

(Luisa Beltran is a senior writer for peHUB.)