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JUNE 15: People walk by the Mediterranean restaurant chain Cava is displayed as the company goes public on the New York Stock Exchange (NYSE) on June 15.Spencer Platt/Getty Images

Mediterranean restaurant chain Cava Group notched a valuation of US$4.7-billion in a stellar market debut on Thursday, signalling the IPO market was gaining momentum after a lull in 2022.

Shares opened at US$42 apiece on the NYSE, nearly double the IPO price of US$22, last up 89 per cent. Cava sold about 14.4 million shares in the offering, raising US$318-million.

Investors are warming up to IPOs this year after a volatility-fueled 2022 curbed appetite for new listings and fuelled a risk-off sentiment.

“The fact that CAVA is unprofitable and generating this level of interest is certainly an important development,” Matthew Kennedy, senior IPO market strategist at Renaissance Capital told Reuters, adding that U.S. IPO activity will gradually normalize in the second half of the year.

Last month, Johnson & Johnson’s consumer health business, Kenvue, completed the largest IPO since Rivian Automotive listed in 2021.

The fast-casual restaurant industry has posted strong sales in recent months despite concerns of a looming recession in the United States.

“We think the markets are always welcoming long-term sustainable growth stories, especially category defining brands, as we try and define the Mediterranean category,” Cava Co-founder and CEO Brett Schulman said.

So far this year, listed peers such as Chipotle Mexican Grill and Shake Shack have risen more than 48 per cent each, outpacing the rise in shares of fast-food brands McDonald’s and Restaurant Brands International.

Cava was founded by three friends with Greek roots – Ted Xenohristos, Ike Grigoropoulos and Dimitri Moshovitis – and opened its first restaurant Cava Mezze in Rockville in 2006.

It started selling its signature dips and spreads in local grocery stores within two years of establishing its first outlet.

J.P. Morgan, Jefferies and Citigroup were the joint lead book-running managers for Cava’s offering.

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