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Could Wall Street’s Next Hit Be a Brothel IPO?

Nevada's Moonlite Bunny Ranch owner tells Bloomberg he wants to 'turn it into a public company'


With the IPO market essentially closed until mid-September thanks to the August doldrums, it’s been kind of lonely at the IPO Playbook.

So what’s left to cover?

Well, how about a potential IPO for the Moonlite Bunny Ranch — a well-known Nevada brothel.

In an interview with Bloomberg, Moonlite owner Dennis Hof says his business has gone up “at least 10 percent a year,” and he has been snapping up struggling brothels (as of now, he has seven locations). Then he outlined his potential expansion plans:

“I’m buying every brothel I can and I want to turn it into a public company and it’s going to be a great company.”

Sex might seem like a can’t-miss business, but Hof’s upbeat sentiment is actually in stark contrast to the industry itself, which is far from robust. One big factor is the ongoing impact of the slowing economy, especially in Nevada, where unemployment remains persistently high at 9.5%. That’s a problem considering a brothel “session” can range from $200 to $600. What’s more, the emergence of online matching services has also taken a toll.

However, Hof’s bet is that as the economy grows, the brothel business will get back on track — and if history is any indication, that’ll probably be the case.

Hof also thinks he can add a little something to the experience, saying the business is “more than sex nowadays.”

Now it’s far from clear whether Hof can pull off a public offering (or heck, if he was really serious about going public in the first place). Firms like Goldman Sachs (GS) or Morgan Stanley (MS) would not want to be associated with such a deal — which is ironic, considering some people think there’s little difference between the brothel business and investment banking.

But, hey — strip club operator Rick’s Cabaret International (RICK) has seen its stock spike about 32% this year to reach a 52-week high. So maybe now’s just the right time to test the IPO market’s willingness to get in on the sex game.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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