By Abigail Summerville
NEW YORK (Reuters) - Private equity firm Bain Capital on Tuesday agreed to buy Fogo de Chão, in a deal people familiar with the matter said valued the Brazilian steakhouse chain at about $1.1 billion, including debt.
The deal marks a win for private equity firm Rhone Capital, which took Fogo de Chão private for $560 million in 2018. Rhône made more than three times the money it invested in the restaurant operator, the sources said, requesting anonymity as the matter is confidential.
Under Rhone's ownership, Fogo de Chão's financial performance improved and it has posted annual revenue growth of 15% since 2021.
Prior to its sale, Rhone had explored re-listing Fogo de Chão's shares on stock exchanges. The restaurant chain confidentially submitted paperwork for an initial public offering to regulators in late 2021, the sources said.
However, it started exploring a sale instead as the U.S. IPO market collapsed in early 2021 and went through an arid spell that lasted a year and a half, forcing several companies to postpone their attempts to go public, the sources said.
Rhône, Fogo de Chão and Bain declined to comment.
Founded in Southern Brazil in 1979, Fogo has a presence in 76 locations worldwide. Bain Capital has a long history of investing in the restaurant industry and has backed several big names, including Burger King, Dunkin’ Brands Inc, Domino’s Pizza Inc and Bloomin’ Brands Inc.
Fogo de Chão's sale comes amid a recent uptick in dealmaking in the restaurant industry. Sandwich chain Subway has been exploring a sale that could be completed in the coming weeks, while Benihana Inc has also been working with advisers to sell itself.
Earlier in August, the Pollo Tropical restaurant chain was sold to Authentic Restaurant Brands for $225 million.
Bain arranged debt financing for the deal from Deutsche Bank (ETR:DBKGn), which is also serving as financial advisor to the firm. Kirkland & Ellis served as legal counsel to Bain.
Morgan Stanley & Co LLC (NYSE:MS) is serving as financial adviser to Fogo de Chão and Rhône, while Sullivan & Cromwell served as legal counsel.
(This story has been refiled to correct a syntax error in paragraph 11)