Retail conglomerate Authentic Brands Group has cancelled its planned initial public offering (IPO) and instead will sell a stake in its business to private equity firm CVC Capital, hedge fund HPS Investment Partners, and a pool of existing stakeholders.
The deal values Authentic Brands at $12.7 billion U.S. in enterprise value. Authentic Brands’ portfolio of companies includes apparel retailers Forever 21 and Aeropostale, department store chain Barneys New York, men’s suit maker Brooks Brothers and Sports Illustrated magazine.
Early next year, Authentic Brands’ deal to buy sneaker maker Reebok is expected to close, adding another brand to its portfolio of holdings.
The company had filed for an IPO in early July. But Authentic said it will now target an IPO date in 2023 or 2024 instead.
A wave of retail companies have entered the public market in recent months, from eyeglasses maker Warby Parker and fashion rental platform Rent the Runway to eco-friendly shoe brand Allbirds and e-commerce fashion site Lulu’s.
Investors have favored names that have a strong footing on the internet, allowing some to fetch valuations as if they were high-growth technology companies.
Authentic Brands was seeking to a $10-billion U.S. valuation in its IPO. The transaction with CVC and HPS is expected to close this December, at which point the private equity firm and hedge fund will each retain a seat on Authentic Brands’ board of directors.
BlackRock will keep its position as Authentic Brands’ largest shareholder, which it has held since 2019, the company said. Existing investors including U.S. mall owner Simon Property Group, General Atlantic, Leonard Green & Partners, and basketball star Shaquille O’Neal will hold on to their equity positions.
When it filed to go public this past summer, Authentic Brands reported that its net income in 2020 jumped to $211 million U.S. from $72.5 million U.S. a year earlier, while its revenue rose about 2% to $489 million U.S.
