Wednesday, February 12, 2014

Sartorial Statements: Battle of the Fashion IPOs




The Olympics are now in full swing, but those of us in corporate law/banking/finance have another spectator sport coming up: IPO watching! The Q2 season is just starting to kick off and rumors regarding which companies will or won't make it this year are flying around faster than a speed skater.

First up, we have Berlin-based fashion e-commerce site Zalando, which is rumored to have recruited Goldman Sachs, J.P. Morgan and Morgan Stanley to guide them through the IPO process. Word on the street is that the company could be valued at more than 4 billion pounds, which would make it Europe's biggest IPO for an internet company. Not bad for a company who, from the looks of their website, definitely ripped off of the Zappos model in the US. Zalando definitely knows how to do business in the EU, as there are 15 different versions of it that you can use to purchase everything from adidas to Versace Jeans.

Moving to the US, we have the well-known flash-sale site Gilt which was EXTREMELY popular when I was in law school. All that typing of students frantically taking notes in Business Administration - yeah, that was actually tons of students frantically purchasing 7 For All Mankind jeans on Gilt for up to 40% off. Gilt Group is said to have picked Goldman Sachs to lead their IPO. Looks like Goldman Sachs' bankers will be stylin' this spring :-P While Zalando's IPO could theoretically be in any number of countries (most likely the US, the UK or Germany), Gilt will most likely go public in the US, as they do not really have an international presence. Gilt is also one of the few flash-sale sites to still be profitable. Fab.com, Rue La La and Lot18 all have reduced their staff or stopped offering flash sales. Since Gilt was the site that originated the concept of an online flash-sale, they are obviously enjoying the benefits of being the first mover. And to throw a bit of spice into the pot, rumors are constantly circulating regarding how much Net-A-Porter could be worth if Richemont ever decided to take it public. That being rather unlikely at the moment, however, it seems like the face-off for e-commerce sites this spring will be between Gilt and Zalando.

Now onto traditional retail. In one corner the British department store House of Fraser, said to be planning a UK IPO for sometime in May. This was apparently not Fraser's first choice, as according to the FT plans for a buy-out by Galleries Lafayette were squashed in late 2013. Next up will supposedly be British retailers Boohoo and Fat Face, both rumored to be planning spring IPOs. They will most likely be going public on the UK exchange, as neither is known in the US. And finally, our dear friend Arnault over at LVMH would like Marc Jacobs to IPO his line and hopes for the same success as befell Michael Kors, who has just officially become a billionaire.

With this lineup heading into the spring, it looks like there will be plenty of capital markets activity for all the lawyers and bankers interested in fashion, particularly if you work at Goldman Sachs. It will be interesting to watch and see who actually manages to IPO, who gets acquired, or who simply doesn't make it to their closing date. Becoming a publicly-traded company is not easy and in lean times like these, only the strong survive.

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