The online fashion retailer plans to interview bankers in upcoming weeks to help lead its New York-based initial public offering, according to sources familiar with the matter. The IPO could come as soon as this year.
The London-based company is aiming for a valuation as high as $5 billion U.S., some of the sources said. E-commerce companies are often quickly growing and lacking clear peers in the public markets, so their planned IPO valuations may evolve with market conditions and investor receptivity.
Unlike typical retailers, Farfetch does not own the inventory it sells, but rather serves as a conduit for brands and boutiques. As such, it can avoid the complicated task of predicting what customers want and the expense of holding it in stock.
Such "marketplace" companies, like eBay (NASDAQ: EBAY) Amazon, JD.com (NASDAQ: JD) and Alibaba (NASDAQ: BABA) often trade at a higher premium than traditional retailers. A $5-billion valuation would take advantage of that premium, pegging Farfetch against them.
The U.S. IPO market has gotten off to a strong start this year, with January raising more IPO proceeds than any other month on Dealogic record.
The sources requested anonymity because the information is not yet public.
In 2016, Farfetch generated revenue of 151 million pounds ($209.9 million U.S.), a 74% increase over the year prior, according to filings with U.K. regulators.
It reported gross merchandise value (value of the goods exchanged on its platform) of 547 million pounds ($760.3 million U.S.). It reported losses of 34 million pounds ($47.3 million U.S).
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