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Luxury watch retailer Chronext plans IPO amid online boom

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(Bloomberg) – Chronext AG is considering listing on the Swiss Stock Exchange, the online luxury watch retailer enjoying a demand boom led by younger generations.

The company plans to raise around 250 million francs ($ 273 million) and existing shareholders plan to sell an unspecified amount of additional shares, the company said in a statement. The selling holders will also make existing shares available for a possible over-allotment representing up to 15% of the shares sold.

Founded in 2013, Chronext is a marketplace that sells both new and used watches, primarily through third-party distributors. The proceeds of the initial public offering will be used for technological investments, to develop the product offering and to expand into new markets, such as the United States and Asia, through possible merger operations and acquisition. The company’s activity is mainly concentrated in Germany, Austria and Switzerland.

Mainstream IPO Rush led by Federers On Running and Dutch Bros

With stock markets at record highs, a slew of European companies are planning to IPOs on the heels of the busiest semester on record for global listings. EQT would line up its chemicals company Azelis for a first sale of shares and consider an IPO of skin care firm Galderma, people familiar with Bloomberg told Bloomberg.

The sale of Chronexts is expected to be finalized in the fourth quarter, subject to market conditions, the company said.

Paradigm shift

The luxury watch market is still primarily a physical affair with just 5% of online sales, McKinsey said in a report in June. The consulting firm predicts that the share will increase to 15% by 2025.

There is a fundamental paradigm shift with the Internet becoming a very important channel, co-founder and CEO Philipp Man said in an interview ahead of the announcement. The best is yet to come as Gen Y and Z have an appetite for such products sold online.

Chronext had a turnover of 101 million euros last year and has yet to make a profit as it focuses on investing in the company, Man said. It has experienced a compound annual growth rate of approximately 104% since its first full year of operation and 47% since 2018.

The platform, which manages the authentication process, can help customers get their hands on rare products faster as it sources from multiple sources. The three best-selling models in the first half of this year on Chronext were the Rolexs Datejust, Omegas Seamaster and Rolexs Submariner. The Datejust sells for at least 4,250 euros.

Trade fairs

Although it is primarily an online business, Chronext offers 11 physical locations in its main markets where customers can pick up their watches. These lounges tend to be located in offices and help build confidence and convenience, he said.

Chronexts shareholders include venture capital firms as well as Man and his co-founder Ludwig Wurlitzer, who have a combined stake of less than 30%.

Evercore Inc. is the company’s financial advisor while Jefferies Financial Group Inc. and UBS Group AG lead the IPO. Bank of America Corp. and Deutsche Bank AG are also involved in the sale of shares.

(Add advisers in last paragraph)

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