Topgolf Might Be Teeing Up For a 2020 IPO

It looks like Topgolf International Inc. might be taking a swing at going public.

The golfing center operator is reportedly in talks with investment banks to pitch as underwriters for an upcoming IPO in 2020, according to Reuters. Sources told Reuters that the plans are not finalized. Topgolf did not respond to a request for comment.

Once described by Topgolf’s former CEO as “bowling for cool people,” the company’s offerings and its unique model are clearly catching on with golfers and bar flies alike. Topgolf locations include not only a driving range complete with microchip-infused balls used for tracking for various golf games, but a fully-equipped bar and food for players.

The nearly 20-year-old, Dallas-based company has raised a total of $647.5 million in private funding, according to PitchBook data. As per their latest funding round in 2017, Topgolf’s valuation was around $2.1 billion. However, analysts estimate the company’s total locations increased by almost 50% since then, from fewer than 40 to over 55 in 2019, according to an analyst at Raymond James. And along with their expansion, their valuation seems to be creating more green.

“We figured conservatively speaking, if number of locations is up by 50%, then the value maybe is up half that, so call it 25%—in our valuation of Topgolf for Calloway, we’ve pegged it at $2.6 billion,” says Raymond James’ Joseph Altobello, who covers Calloway Golf Co., one of Topgolf’s largest investors. “I would guess that Topgolf probably wants some capital to continue their expansion,” Altobello adds.

Other analysts have more ambitious estimates. According to B. Riley FBR’s Susan Anderson, Topgolf may be worth over $3.3 billion. And according to people familiar with the matter who spoke to Bloomberg on Monday, the company might now be looking at a $4 billion valuation for their anticipated 2020 IPO. The company is reportedly working with banks including JPMorgan Chase, Bank of America, and Morgan Stanley.

Some of Topgolf’s investors include U.S. buyout firm Providence Equity Partners, WestRiver Group, and Dundon Capital Partners. In addition to its over 50 locations in the U.S., it has three in the U.K., and one in Australia.

Calloway holds a 14% stake in Topgolf (worth around $290 million), accrued over a variety of rounds including secondary transactions, late stage VC funding, and corporate deals, according to PitchBook. And for Raymond James’ Altobello, Calloway may be looking for a way to cash out soon.

“[Calloway] has definitely been more open in recent weeks and months to potentially monetize that stake,” Altobello told Fortune. “They’ve been involved in Topgolf for over a decade now. It’s still a passive investment, but clearly they’ve been increasingly open to monetizing that somehow, either through a sale, or more likely, an IPO.” Additionally, he says Calloway has an incentive to raise funds through a stock sale in the near future.

“It’s a compelling concept. Beer and golf, right?” Altobello says. He notes that the interactive concept coupled with locations in which consumer spending remains strong, are driving the company’s growth.

Topgolf is also capitalizing on a tech push that could help bolster their balance sheet. (The privately held company has not publicly released any financials.) The sports entertainment company owns Toptracer, which uses proprietary software to help track ball movement, speed, and a variety of other features that help customers play different games at Topgolf’s locations (the tech is also used during televised golf tournaments). Raymond James notes that the company will likely continue to monetize this in the future through things like agreements with driving ranges.

The company is also fresh with a new flux of debt financing to the tune of $525 million (split between a loan and revolving credit line) from J.P. Morgan in March of this year, according to PitchBook.

Investors will have to wait and see if a Topgolf can get their IPO on the green in 2020.