* Market value touches $5.60 bln
* Shares open at $35 after pricing at $18 (Updates share price, adds background on market, Apollo's investments)
By Neha Dimri and Olivia Oran
Aug 1 (Reuters) - Shares of organic grocer Sprouts Farmers Market Inc more than doubled in their market debut on Thursday as investors scrambled for a stake in the fast-growing health food industry.
Shares opened at $35 on the Nasdaq, after the Phoenix, Arizona-based company raised $333 million in its initial public offering on Wednesday.
Sprouts, backed by private equity firm Apollo Global Management LLC, was worth about $5.6 billion at the highest trading price on Thursday morning.
Sprouts operates more than 160 stores across the United States, selling everything from fresh fruit to homemade burgers.
The company's products are priced lower than those of competitors, including Whole Foods Markets, said Francis Gaskins, a partner at IPO research company IPODesktop.com.
"They have a very good business model going forward."
Sales of natural and organic food in the United States rose about 12 percent annually between 1997 and 2011, when the market was worth about $43 billion, according the Nutrition Business Journal.
The market is expected to grow by about 10 percent annually through 2020, the industry magazine said.
Demand for the sector also comes despite a pullback in U.S. consumer confidence in July, according to the Conference Board's index.
Shares of high-end grocery store chain Fairway Group Holdings have risen about 90 percent since their debut in April, while those of health-food chain Natural Grocers by Vitamin Cottage Inc have more than doubled since going public in July 2012.
As the market for organic and natural foods becomes more crowded it is putting pressure even on the sector's largest players.
Shares of market leader Whole Foods slipped on Wednesday after the company said its growth rate for same-stores sales had slowed so far in the current quarter.
Sprouts, founded in 2002, reported net income of $19.5 million for 2012, compared with a loss of $27.4 million in 2011. Net sales on a pro forma basis rose 16 percent to $2 billion.
Market leader Whole Foods, which has about 350 stores, recorded sales of $11.7 billion for the year ended September 2012.
Sprouts was acquired by Apollo in 2011 and merged with Henry's Farmers Market, another Apollo holding. Sprouts was again merged with grocer Sunflower Farmers Market last year.
Apollo's stake in Sprouts has been diluted to 45.4 percent after the offering from 51.8 percent.
Private equity firms are looking to cash out their investment in portfolio companies as U.S. stock markets trade at record highs.
Total proceeds from IPOs during the second quarter rose to $13.1 billion from $7.8 billion in the first quarter. Private equity firms accounted for 71 percent of IPO volume, according to PricewaterhouseCoopers. (link.reuters.com/byc22v)
Apollo in particular has aggressively looked to sell a number of its portfolio companies in the public markets this year, including Norwegian Cruise Line Holdings Ltd and relocation services provider Realogy Holdings Corp
Goldman Sachs Group Inc and Credit Suisse AG were the lead underwriters to the Sprouts offering.
Sprouts shares changed hands at $36.54 during Thursday afternoon trading. (Reporting by Neha Dimri in Bangalore; Editing by Joyjeet Das, Bernard Orr)