Authentic Brands Group shelves IPO, to sell $12.7 billion stake to private investors

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  • Retail conglomerate Authentic Brands Group is shelving a planned initial public offering.
  • Instead, it plans to sell a significant equity stake in its business to private equity firm CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders in a deal worth about $12.7 billion.
  • Authentic Brands CEO Jamie Salter said the company will target an IPO date in 2023 or 2024.
  • He has signed on to be CEO for another five years.

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Retail conglomerate Authentic Brands Group plans to postpone the initial public offering and instead sell a significant equity stake in its business to a private equity firm. CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders, CNBC has learned.

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

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. It has a deal to buy sneaker maker Reebok early next year expected to close, is adding another brand to its holdings.

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the company had Filed for IPO in early July, But Authentic Brands chief executive Jamie Salter said it would target an IPO date in 2023 or 2024. He said he has signed on to be CEO for another five years.

“The IPO environment is ridiculous,” Salter said in a phone interview. “I think we may have gotten a massive valuation… Maybe even more than the business we sold. But guess what? I’d prefer to be private.”

A wave of retail companies have entered the public market in recent months, from eyeglasses maker Warby Parker and fashion rental platform Rent the Runway to eco-friendly shoe brand Allbirds and e-commerce fashion site Lulu. Investors favor names that have a strong foothold on the Internet, allowing some to receive valuations as if they were high-growth tech companies.

CNBC had reported that Authentic Brands was seeking a valuation of about $10 billion at its public debut.

The transaction with CVC and HPS is expected to close this December, at which time the PE firm and hedge fund will each retain a seat on the Board of Directors of Authentic Brands.

“We plan to work closely with the ABG team to implement their strategic priorities, especially for international expansion,” said Chis Baldwin, CVC’s Managing Partner.

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

When it filed to go public, Authentic Brands reported that its net income rose to $211 million in 2020 from $72.5 million a year ago, while its revenue grew nearly 2% to $489 million.

“We have the same playbook today that we had yesterday,” Salter said. “You’ll hear about more acquisitions by the end of this year.”

CVC recently Agreement to buy Unilever’s tea business, Some of the firm’s other portfolio companies include streetwear brand A Bathing App and pet accessories chain Petco, according to its website. HPS spun off from JPMorgan Asset Management in 2016.

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