Chipotle Mexican Grill is banking on its big burritos bringing a bigger-than-expected initial stock sale.
The Denver company disclosed plans Monday to increase the expected price of its initial public offering this week from $15.50 to $17.50 a share to a range of $18 to $20 a share, according to a securities filing.
Chipotle is expected to set the price for 7.8 million shares Wednesday, meaning shares will begin trading Thursday on the New York Stock Exchange under the ticker CMG.
Based on the new price range, the “fast-casual” dining chain expects to raise nearly $150 million. The company expects to receive $105 million after underwriting discounts, commissions and offering fees, the filing showed.
The company intends to use the proceeds to maintain existing stores and open as many as 90 stores during the next year.
It also plans to repay $30 million to its parent, hamburger giant McDonald’s Corp., which will retain a majority ownership stake in the company.
Chipotle plans to sell 6.06 million Class A common shares with McDonald’s Ventures LLC selling 1.8 million Class A shares, the filing showed.
Chipotle, which started in 1993 as a single store near the University of Denver campus, operates 489 locations in 22 states. It posted a 33 percent revenue increase for the nine months ended Sept. 30, the filing showed.
Chipotle likely increased its offering price because of strong interest from large investors, said Scott Ansel, vice president for investments at Piper Jaffray in Denver.
“It would appear that the demand is so great that they decided to increase the price,” said Ansel, who is not involved with the offering.
He said it is common for a company to increase or decrease an offering price in the days leading up to an IPO, depending on investor interest.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
