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Authentic Brands Announces IPO, Sells $ 12.7 Billion Stake to Investors

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Jamie Salter, President and CEO of Authentic Brands Group LLC.

Norm Betts | Bloomberg | Getty Images

Retail conglomerate Authentic Brands Group plans to suspend initial public offering and instead sell large stakes in its business to private equity firm CVC capital, hedge funds HPS investment partners and a pool of existing stakeholders, CNBC learned.

The deal is valued at around $ 12.7 billion and is expected to be announced on Monday, the company said.

Authentic Brands’ portfolio companies include clothing retailers Forever 21 and Aeropostale, department store chain Barneys New York, menswear maker Brooks Brothers and Sports Illustrated magazine. Early next year, his deal to buy sneaker maker Reebok is should close, adding another brand to its portfolio.

The company had filed for an IPO in early July. But Authentic Brands chief executive Jamie Salter has said he will aim for an IPO date of 2023 or 2024. He said he has signed on to be CEO for an additional five years.

“The climate for the IPO is ridiculous,” Salter said in a telephone interview. “I think we would have gotten a massive appraisal… maybe even more than what we sold the company for. But guess what? I’d rather be private.”

A wave of retail companies have entered the public market in recent months, from eyewear maker Warby Parker and fashion rental platform Rent the Runway to eco-friendly footwear brand Allbirds and e-commerce site Lulu’s fashion. Investors favored stocks with a strong Internet presence, allowing some to obtain valuations as if they were high growth technology companies.

CNBC had reported that Authentic Brands was looking for a valuation of around $ 10 billion in its public debut.

The deal with CVC and HPS is expected to close in December, when the private equity firm and hedge fund will each retain a seat on the board of Authentic Brands.

“We plan to work closely with the ABG team to execute their strategic priorities, particularly around international expansion,” said Chis Baldwin, Managing Partner at CVC.

BlackRock will retain its position as the largest shareholder of Authentic Brands, which it has held since 2019, the company said. Existing investors including US mall owner Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield and basketball star Shaquille O’Neal will retain their stakes.

When filing its release request, Authentic Brands said its net income in 2020 jumped to $ 211 million from $ 72.5 million a year earlier, while its revenue rose about 2%. to $ 489 million.

“We have the same playbook today as yesterday,” said Salter. “You will hear about more acquisitions by the end of this year.”

HVAC recently has reached an agreement to purchase the tea business of Unilever. Some of the other companies in the firm’s portfolio include streetwear brand A Bathing Ape and pet chain Petco, according to its website. HPS separated from JP Morgan Asset Management in 2016.

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