Bain Capital's Dollarama files for C$300 mln IPO

A source close to the deal told Reuters the IPO would raise some C$300 million ($278 million) and that underwriters hoped to close the offering by mid-October.

It is the latest in a string of private equity-backed IPO filings in North America, as buyout firms seek to take advantage of the improved markets to exit investments.

U.S. retailer Dollar General Corp, backed by private equity firm Kohlberg Kravis Roberts & Co [KKR.UL], said in August that it was seeking to raise up to $750 million in an IPO.

Discount retailers have been buoyed by a recession that has made consumers more price conscious. Dollar General's profit tripled to $93.6 million in the second quarter, over the year earlier period.

"It's not a great market for IPOs, but Dollarama has got a very good track record, a very good business mode and good brand equity," said the source with knowledge of the deal.

"It still has a good domestic growth story in Canada, and the valuation isn't extreme, so I think it's going to get a very good reception."

Dollarama is 80 percent controlled by Boston-based Bain Capital, which bought its majority stake in a leveraged buyout deal in 2004.

Bain provided about C$364 million of equity for the C$1.05 billion deal, reports at the time said.

The company, based in Montreal and operator of 585 stores, said the IPO's underwriters would include RBC Dominion Securities Inc, CIBC World Markets Inc, Credit Suisse Securities (Canada) Inc, Scotia Capital Inc, Barclays Capital Canada Inc, National Bank Financial Inc, Desjardins Securities Inc, HSBC Securities (Canada) Inc, Merrill Lynch Canada Inc, and Raymond James Ltd.

Dollarama, which sells products for C$2 or less, is the largest operator of dollar stores in Canada.

The firm, founded in 1992 with 44 stores, intends to open 30 to 40 new outlets a year for the foreseeable future, according to its prospectus.

Dollarama plans to use about C$70 million of the IPO's proceeds to repay some promissory notes, C$38 million to repay in full the term loan, and the majority of the remainder to pay down other notes.

As of Aug. 2, the chain had 12,371 employees according to the prospectus. There are about 1,000 dollar stores in Canada, including Dollarama's 585 stores.

(Reporting by Phil Wahba and Megan Davies in New York, Pav Jordan in Toronto, and Ajay Kamalakaran in Bangalore; editing by Rob Wilson)

($1=1.078 Canadian Dollar)