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Got steak? Bloomin' Brands stock sizzles in debut

August 8, 2012: 11:58 AM ET

Shares of Outback Steakhouse owner Bloomin' Brands (BLMN) surged 10% above its initial public offering price in its debut on the Nasdaq (NDAQ) Wednesday morning.

It's not a home run for Bloomin' Brands or its private equity parents, Bain Capital and Catterton Partners. Bloomin' Brands' underwriters cut the size of the offering to 16 million shares from 21 million, and dropped the IPO price to $11 from a range of $13 to $15, in an effort to drum up investor demand.

The strategy seemed to be working. By late morning, the restaurant chain's shares were trading above $12.

In 2006, Bain Capital and Catterton Partners spent $3.2 billion to take Bloomin' Brands, then known as OSI Restaurant Group, private before jumping on a growing IPO bandwagon.

Related: Restaurant week for IPOs: Outback Steakhouse, Carls Jr. going public

Newly public restaurant chains, including Chuy's (CHUY), Ignite Restaurant Group (IRG) and even Dunkin'Brands (DNKN), have generated hefty returns for investors.

Investors and IPO analysts said they're somewhat wary of both Bloomin' Brands and fast food chain CKE, which is set to debut  Friday, because of their heavy debt loads.

Bloomin' Brands is saddled with $1.5 billion of debt, but it still managed to book a $100 million profit on $3.8 billion of revenue in 2011.

Francis Gaskin, president of IPODesktop, said restaurant chains that have fared best as public companies are those with good growth trajectories. That could prove challenging for both Bloomin' Brands and CKE, owner of Carl's Jr. and Hardee's, which already have more than 1,000 and 3,000 stores respectively.

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