In a post-pandemic world, brick and mortar could hardly be seen as a cash cow, but signs of recovery after those mask-clad years could soon prove the sceptics wrong.
While the aftermarket performance of Birkenstock [NYSE:BIRK] has left investors with a bitter taste, the recent confidential filing in the US by Amer Sports, a Finnish sports goods manufacturer backed by Chinese athletic apparel maker ANTA Sports [HKG:2020], could be another test for the category.
In Europe, Swedish retail chain Rusta priced yesterday its IPO at SEK 45 per share, raising SEK 2.3bn (EUR 202.6m) through the offering and achieving a market value of approximately SEK 6.831bn (EUR 587m). Its share price was slightly down on the first day of trading.
Regardless, the tide is turning for retailers prepping listings that have silently been redressing their businesses and fortunes, according to advisers in the market.
Historically, issuance has been a mixed bag, mainly reliant on follow-ons (FO), with IPOs surpassing FOs amid low volumes last year. So far this year, volume has risen by 50% compared to 2022 with 40 deals pricing for a total volume of USD 6bn compared to 49 transactions which raised USD 3.9bn in the whole of last year.
When looking at quarterly figures, 4Q23 is the best performing quarter in two years, with USD 2.7bn raised across four deals alone, compared to only USD 527m raised from nine deals QoQ, according to Dealogic data.
Two of the highlights for next year could be already set. CVC Capital Partners’ planned IPO of beauty company Douglas, for which banks have now been selected, could potentially value the German perfume retailer at over EUR 9bn. In Italy, sponsor Permira is appointing syndicate banks for the IPO of sneaker retailer Golden Goose.
Retail is a promising IPO category as the sector has rebounded well from the pandemic, according to an ECM banker; leverage has gone down and there are several other retailers under sponsor ownership which are exploring options. Many players have witnessed marked recovery both in their online and, more surprisingly, in physical stores. In addition, peer valuations are generally positive at the moment, he said.
UK-based discount retailer Poundstretcher appointed Rothschild to explore a potential listing on the stock market in London, according to reports in April. In Sweden, Matsmart, an online retailer of surplus food owned by SEB Private Equity and Exor Capital, is being monitored as a possible IPO candidate in the next two years as it traverses a period of sustained growth, as reported by this news service.
Other name slinger in the pipeline. Flaconi, a German online perfume and beauty products retailer owned by ProSiebenSat.1 Media [ETR:PSM] and General Atlantic, was seen as an IPO candidate in 2022, but a spokesperson for ProSiebenSat.1 Media later told this news service there were no immediate plans to list. The owners and the company declined to comment. Flaconi has a score of 27 out of 100 according to Mergermarket's Likely to Exit (LTE) predictive algorithm.* The scores are substantially weighted by recent intel on likely exit and driven by how long they have been under sponsors or VCs.
Early this year, Quadriga Capital pulled a dual-track process for LR Health & Beauty, a cosmetics and nutritional sales company, amid perceivedly unfavourable market conditions and lukewarm interest by potential private bidders. LR Health & Beauty has a score of 27 out of 100 according to Mergermarket's Likely to Exit (LTE) predictive algorithm.* It has been held by Quadriga Capital for a decade.
Meanwhile, Action, a Europe-wide non-food discount retailer, was seen by two advisers as a likely candidate for an Amsterdam IPO but a spokesperson for owner 3i previously told this news service that they are happy with the investment for now. CEO, Simon Borrows however referenced approaches for Action over the years in a report. Action has an LTE score of 36.
As one of the ECM bankers said, there are as many opportunities as there are good PE-backed retailer assets with a decent maturity period across Europe.
It might be time to go window shopping.
*Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.
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