Jamie Salter, CEO of Authentic Brands Group.
Source: Authentic Brands Group
The retail group Authentic Brands Group plans to have a planned IPO and instead sell significant stakes in its business to a private equity firm CVC capital, Hedge fund HPS investment partner and a pool of existing stakeholders.
The deal valued the company at an enterprise value of $ 12.7 billion and was announced Monday.
Authentic Brands’ portfolio companies include apparel retailers Forever 21 and Aeropostale, department store chain Barneys New York, men’s suit maker Brooks Brothers and Sports Illustrated magazine. The sneaker manufacturer Reebok is to be bought early next year expected to be closedto add another brand to its holdings.
The company had IPO applied for in early July. However, Jamie Salter, chief executive of Authentic Brands, said the company will now aim for an IPO in 2023 or 2024. He said he has committed to serving as CEO for another five years.
“The IPO climate is ridiculous,” said Salter in a telephone interview. “I think we would have gotten a massive rating … maybe even more than what we sold the business for. But guess what? I’d rather be private.”
In the last few months a wave of retail companies has entered the public market – eyewear manufacturers Warby Parker and fashion rental platform Rent the runway to the environmentally friendly shoe brand Allbirds and e-commerce fashion site Lulus. Investors have preferred names that have a strong presence on the internet, which some believe Collecting reviews as if they were high-growth tech companies.
CNBC reported that Authentic Brands was aiming for a valuation of approximately $ 10 billion on its public debut.
The transaction with CVC and HPS is expected to close in December this year. At this point in time, the PE company and the hedge fund each retain a seat on the Board of Directors of Authentic Brands.
“We plan to work closely with the ABG team to implement its strategic priorities, particularly with regard to international expansion,” said Chis Baldwin, managing partner at CVC.
BlackRock will retain its position as the largest shareholder in Authentic Brands, which it has held since 2019, the company said. Existing investors including US mall owners Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shaquille O’Neal will maintain their equity positions.
When it went public, Authentic Brands reported that its net income increased from $ 72.5 million a year ago to $ 211 million in 2020, while sales rose about 2% to $ 489 million is.
“We have the same playbook today as we did yesterday,” said Salter. “You will hear about more acquisitions by the end of this year.”
CVC recently closed a deal to buy Unilever’s tea business. The company’s other portfolio companies include streetwear brand A Bathing Ape and the animal goods chain Petco, according to his website. HPS was spun off from JP Morgan Asset Management in 2016.