Mister Car Wash stock jumps in IPO

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Mister Car Wash has a market share of less than 5%, according to its CEO.

Nomadesoul1 / Dreamtime

Actions of

Mr. car wash,

the first pure-play car wash chain to go public, climbed 46% in its first day of trading.

Mister Car (ticker: MCW) opened at $ 18.90, peaked at $ 21.85, and changed hands at $ 20.35 late in the day, gaining nearly 36%.

The company issues shares to some of its 6,000 employees, including its operations management team, said John Lai, president and CEO. that of Barron. “We believe in sharing. We couldn’t do it without our amazing leaders, ”Lai said.

The strong performance came as

Mr. car wash

delivered the biggest deal of the day. Mister Car Wash (MCW) raised $ 562.5 million after sale 37.5 million shares at $ 15, the low end of the $ 15 to $ 17 range that investors were expecting.

Founded in 1996, Mister Car Wash has 344 locations in 21 states, according to the deal prospectus. The company washed more than 345 million cars.

Lai said the company’s monthly subscription program, Unlimited Wash Club, has been transformative. It generates over 60% of sales and provides a predictable, recurring high-margin revenue stream, he said.

A subscription that covers only unlimited vehicle exterior cleaning costs $ 19.99 per month. This drops to $ 29.99 per month for the Platinum subscription, which includes an underbody wash and wheel polish, according to the Mister Car Wash website. Interior cleaning starts at $ 59.99 per month, according to the website.

“For most Americans, the automobile is more than just a form of transportation, it is a source of pride that they take great joy in,” said Lai.

The company is also the first pure-play car wash to go public, Lai said. Driven Brands (DVRN), owned by Roark Capital, listed its shares in February, up 21% on its first day of listing. Driven provides services such as repairs and maintenance, in addition to washing.

“We’re the world’s largest car wash company and wash more cars than anyone else. We have less than 5% market share, so the upside potential seems endless, ”Lai said.

Mister Car Wash plans to use the proceeds of the IPO to pay off debt, which stood at around $ 1.05 billion as of March 31, according to the prospectus. This will reduce the company’s debt to 2.5 times earnings before interest, taxes, depreciation and amortization, Lai said.

Mister Car Wash has been owned by three different private equity firms over its 25 year history. Brown, McMillan & Co sold Mister Car Wash to OnCap, the PE arm of

Onex Corp

in 2007. Leonard Green & Associés acquired it in 2014.

Mister Car Wash has paid at least two dividends since Green took possession. This includes a distribution of $ 215 million to shareholders in 2019 and a Dividend of $ 213 million in 2016, according to Moody’s Investors Service. The total amount means that Green has already recovered his stake in Mister Car Wash.

The PE company sold around 3.3 million shares on the IPO, or around $ 49 million.

Green will own almost 78% of Mister Car Wash after the offer, the flyer says. At $ 20.35, Green’s stake is valued at $ 4.7 billion. “They have been amazing throughout this trip. They let us run the business without micromanaging, ”Lai said of Leonard Green.

Write to Luisa Beltran at [email protected]

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