Authentic Brands Group has shelved its plans for an initial public offering in favor of a deal with two private-equity firms that values the brand developer at $12.7 billion.
CVC Capital Partners and HPS Investment Partners will acquire “significant” equity stakes in the company from certain existing shareholders, Authentic said Monday in a news release.
Authentic filed in July for an IPO but CEO Jamie Salter said it will now target an offering date in 2023 or 2024.
“ABG’s goals have not changed at all,” a spokeswoman for the company said. “We pursued an IPO so that we could bring value to ABG and its shareholders. We are achieving exactly that with the onboarding of new equity partners.”
Salter told Barron’s that CVC and HPS will own a combined stake of roughly 25% and that the deal will provide liquidity and value to existing shareholders without going public.
“The IPO climate is ridiculous,” he told The Wall Street Journal. “I think we would have gotten a massive valuation … maybe even more than what we sold the business for. But guess what? I’d rather be private.”
Authentic, which specializes in reviving distressed brands, now owns more than 30 brands including Aeropostale, Brooks Brothers, Forever 21, and Sports Illustrated. The pending acquisition of Reebok will bring the value of its portfolio to more than $20 billion in annual system-wide retail sales.
“The power of the ABG platform is evident in its growth to date, and we believe the company is only beginning to realize the full benefit of its scale and diversification,” Chris Stadler, a managing partner at CVC, said.
According to its IPO prospectus, Authentic’s net income jumped in 2020 to $211 million from $72.5 million a year earlier, while its revenue rose about 2% to $489 million.
The company had reportedly been seeking a valuation of about $10 billion in its public debut.
“The investments from CVC Capital and HPS Investment Partners are a strong vote of confidence in ABG’s long-term vision and strategic approach,” Authentic President Nick Woodhouse said.