Dollarama went public at the top of range in 2009 and repaid its debt

Dollarama entered 2009 as Canada's leading dollar-store chain, founded in 1992 by third-generation retailer Larry Rossy and controlled by Boston buyout firm Bain Capital, with 585 locations across the country and fixed price points between $1.00 and $2.00. The 2008 recession had frozen Canada's IPO market, and the company carried the debt load left by its leveraged ownership, including 8.875% Senior Subordinated Notes due 2012, a term loan and notes owing to shareholders.

Instead of waiting for recovery, Dollarama pitched the recession's own logic: shoppers were trading down, so demand for discount retailers placed the chain at an advantage. In early October 2009 it agreed to sell 17.14 million shares at C$17.50, the top of its C$16-C$18 range, in an issue reportedly oversubscribed. The offering closed on October 16, 2009, grossing about C$300 million; the shares listed on the Toronto Stock Exchange as DOL, and net proceeds were earmarked to repay the 8.875% notes, the term loan A facility and notes owing to shareholders.

The pricing reflected both the window and the business: based on the IPO price, Dollarama's market capitalization was about C$1.3 billion, and Canadian companies had raised C$1.37 billion in IPOs that year, up from C$773 million in the same period a year earlier. The recovery compounded after the financing was done. For fiscal 2013 Dollarama posted C$1.86 billion in sales, up 16%, with comparable-store sales growing 4.8% in Q3, more than 820 locations across Canada, and plans to open 84 stores that year and 70 to 80 in 2015.

The IPO raised about C$300M, repaid the 8.875% notes and term loan, and Dollarama grew to C$1.86B sales and 820+ stores by fiscal 2013.

The recession moved demand toward discount retail: demand for dollar stores in recession-struck Canada placed Dollarama at an advantage and the issue was reportedly oversubscribed.

The offer priced at the top of the range, C$17.50 against a C$16-C$18 range, implying a market capitalization of about C$1.3 billion.

The proceeds went to repair the balance sheet rather than to growth: net proceeds repaid the 8.875% Senior Subordinated Notes due 2012, the term loan A facility and notes owing to shareholders.

The recovery kept compounding after the financing: fiscal 2013 sales reached C$1.86 billion, up 16%, with more than 820 locations and roughly 84 new stores planned in a single year.

A recession is not one market for everyone: while capital markets shut, discount demand rose, and Dollarama sold at the top of the range to repair its leveraged balance sheet.

Dollarama's 2009 listing became the base of a long Canadian growth run. By fiscal 2013 it reported C$1.86 billion in sales, up 16%, with more than 820 locations and plans for 84 new stores that year and 70 to 80 in 2015. Environics ranked it the fourth most-frequented grocery destination among Canadian mothers, and consultants credited it with taking share from Walmart and supermarkets. The window it opened also reset the market: Canadian companies raised C$1.37 billion in IPOs that year, nearly double the C$773 million raised in the same period of 2008.