The company turned a $3 million profit in the same period last year. Now it is losing money, yet it wants to sell shares anyway.
Cumberland Farms intends to allocate the IPO funds toward, among other things, the repayment of two term loan facilities. A spokesperson for the company said, "We intend to allocate the IPO funds toward the repayment of two term loan facilities."
The parent company of Cumberland Farms is EG Group Ltd, a UK-based entity established in 2001 by the Issa brothers, Mohsin and Zuber. EG Group now runs more than 1,400 sites in the US and more than 1,700 in Europe. The Issa brothers are billionaires. They grew EG Group from a single gas station into a global convenience store empire.
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Their buyout firm TDR Capital also backs the company.
The company is filing during a record start to the year for US IPOs. From January 1 through June 26, the total value of US IPOs and share sales hit $251 billion. Revenue grew from $3.73 billion to nearly $4 billion in the first three months of the year compared to a year earlier.
Yet profits flipped to a loss. This loss, however, did not deter the company from seeking public funds to strengthen its balance sheet.
Cumberland Farms' decision to go public despite a quarterly loss highlights the current appetite for new listings. Owned by the Issa brothers' EG Group, which operates over 3,100 convenience stores globally, the company's underlying revenue growth of about 7% year-over-year signals operational strength.
The Issa brothers, backed by TDR Capital, have built EG Group into a major retail player through acquisitions, and the IPO allows them to raise capital while retaining control. Investors will weigh the $95 million loss against the company's scale and growth potential. Notably, the same quarter last year generated a $3 million profit, making the swing to a loss a point of scrutiny.
The $9 billion valuation target, based on the expected $1 billion raise, suggests confidence in the company's long-term prospects despite short-term financial headwinds.
The loss is partly a consequence of the aggressive acquisition strategy that built EG Group. The Issa brothers have historically financed growth through debt, and interest expenses along with integration costs likely contributed to the $95 million quarterly deficit. This approach allows them to tap public equity markets without diluting their influence over the business.
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