Authentic Brands shelved its IPO and sold shares valued at the company for $12.7 billion

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Jamie Salter, CEO of Authentic Brands Group.

Source: Authentic Brands Group

The retail group Authentic Brands Group will shelve its planned initial public offering and instead sell a large amount of its business equity to private equity firm CVC Capital, hedge fund HPS Investment Partners and existing stakeholders.

The deal was announced on Monday and brought the company an enterprise value of US$12.7 billion.

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. At the beginning of next year, its acquisition of sports shoe manufacturer Reebok is expected to be completed, adding another brand to its holdings.

The company has applied for an IPO in early July. But Authentic Brands CEO Jamie Salter said that its current goal is an IPO date of 2023 or 2024. He said that he has been signed as CEO for five years.

“The atmosphere of the IPO is ridiculous,” Salt said in a telephone interview. “I think we will get a huge valuation…maybe even higher than the price at which we sell the business. But guess what? I would rather keep it secret.”

In recent months, a wave of retail companies have entered the open market, from glasses manufacturer Warby Parker and fashion rental platform Rent the Runway, to environmentally friendly footwear brand Allbirds and e-commerce fashion website Lulu’s. Investors prefer names that have a strong foothold on the Internet, which allows some companies to obtain valuations like high-growth technology companies.

CNBC has reported that Authentic Brands sought a valuation of approximately US$10 billion during the initial public offering.

The transactions with CVC and HPS are expected to be completed in December, when PE companies and hedge funds will each retain their seats on the Board of Directors of Authentic Brands.

“We plan to work closely with the ABG team to execute their strategic priorities, especially in terms of international expansion,” said Chris Baldwin, managing partner of CVC.

The company said that BlackRock will maintain its position as the largest shareholder of Authentic Brands since 2019. Existing investors including the owner of the Mall of America Simon Real Estate Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shaquille O’Neal will retain their equity.

Authentic Brands reported when applying for listing that its net income in 2020 jumped from USD 72.5 million a year ago to USD 211 million, while its income increased by approximately 2% to USD 489 million.

“Our script today is the same as yesterday,” Salt said. “By the end of this year, you will hear more news about acquisitions.”

CVC recently reached an agreement with Unilever’s tea business. According to its website, some of the company’s other portfolio companies include streetwear brand A Bathing Ape and pet supply chain Petco. HPS was spun off from JPMorgan Chase Asset Management in 2016.

Correction: This article has been updated to reflect that the transaction valued the company at $12.7 billion, and the spelling of Chris Baldwin’s name was corrected.


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