Safeway's Blackhawk up 14 percent in Nasdaq debut

Fri Apr 19, 2013 11:51am EDT

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(Reuters) - Shares of Blackhawk Network Holdings Inc (HAWK.O) rose as much as 14 percent to $26.23 in their debut, valuing the gift card and payment services unit of grocer Safeway Inc (SWY.N) at about $1.36 billion.

Safeway has been looking to unlock the value of its gift cards unit for a while as the business has grown exponentially over the past few years given the popularity of such cards.

Blackhawk, which makes 84 percent of its total revenue by offering gift cards from leading consumer brands such as Amazon.com (AMZN.O), Macy's Inc (M.N), Starbucks Corp (SBUX.O) and others, has seen its adjusted operating revenue nearly triple to $448.3 million since 2008.

According to the National Retail Federation, an industry trade group, the gift cards business is only expected to grow.

Its latest survey showed that total spending on gift cards was expected to have reached $28.79 billion in 2012, with the average person spending $157 on gift cards alone -- the highest figure since the trade group initiated the survey 10 years ago.

SAFEWAY'S GRIP

The company priced its IPO of 10 million Class A shares at $23 per share, above its expected price range, raising about $230 million.

The second-largest U.S. grocery store operator will continue to exercise full control over the company it created in 2001 by holding 93.8 percent of its total outstanding shares of Class B common stock, and 91.6 percent of the combined voting power.

Blackhawk also has its own prepaid debit card, PayPower, besides selling prepaid debit cards by Green Dot Corp (GDOT.N) and Netspend Holdings Inc NTSP.O.

The company recently introduced digital wallet services, competing with mobile payment service providers such as Square, which has attracted millions of dollars in venture capital funding.

Goldman Sachs & Co, BofA Merrill Lynch, Citigroup and Deutsche Bank Securities were lead underwriters for the offering.

(Reporting by Avik Das in Bangalore; Editing by Supriya Kurane)

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