Authentic Brands IPO shelves to sell $ 12.7 billion shares to investors

Jamie Salter, Chairman and CEO of Authentic Brands Group LLC.

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The retail conglomerate Authentic Brands Group plans to hold a planned initial public offering and will instead sell its business significant equity shares to private equity firm CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders, CNBC has learned.

The deal is valued at about .7 12.7 billion, and is expected to be announced on Monday, the company said.

Authentic brand portfolio companies include clothing retailer Forever 21 and Aeropostel, department store chain Bernice New York, men’s suit maker Brooks Brothers, and Sports Illustrated Magazine. Early next year, sneaker maker Reebok is expected to close the deal, adding another brand to its holdings.

The company applied for an IPO in early July. But Jamie Salter, chief executive of Authentic Brands, says it will target an IPO date in 2023 or 2024. He says he has signed on to be CEO for another five years.

“The IPO climate is ridiculous,” Salter said in a phone interview. “I think we’d get a bigger appraisal … maybe more than the business we sold. But guess what? I’d rather be private.”

In recent months a wave of retail companies has entered the public market, from eco-friendly shoe brand Albards and e-commerce fashion site Lulus to spectacle maker Warby Parker and fashion rental platform Rent the Runway. Investors have backed names that have a strong position on the Internet, allowing some to evaluate themselves as high-growth technology companies.

CNBC reported that the authentic brands wanted a valuation of around 10 10 billion for its public debut.

Transactions with CVC and HPS are expected to close this December, with PE firms and hedge funds each retaining a seat on the board of directors of the authentic brand.

“We plan to work closely with the ABG team on their strategic priorities, especially in the area of ​​international expansion,” said Chis Baldwin, a managing partner at CVC.

BlackRock will maintain its position as the largest shareholder of the authentic brand, which it has maintained since 2019, the company said. Existing investors, including US mall owner Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shakil O’Neill, will hold their equity positions.

When it went public, Authentic Brands reported that its net income in 2020 rose to $ 211 million from $ 72.5 million a year earlier, while its revenue increased nearly 2% to $ 489 million.

“We have the same playbook today as we did yesterday,” said Salter. “You’ll hear about more acquisitions later this year.”

CVC recently struck a deal to buy Unilever’s tea business. The firm’s other portfolio companies include Streetwear brand A Bathing App and pet product chain Petco, according to its website. HPS exited JP Morgan Asset Management in 2016.

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