Authentic Brands Group, the parent company of popular consumer clothing brands such as Aeropostale and Forever 21, said it would not be moving forward with its planned initial public offering. The company said that it would instead be selling a significant equity stake to several investors.
The company said it has already reached a deal with private equity company CVC Capital, hedge fund company HPS Investment Partners, and a group of existing stakeholders. Authentic Brands said the deal is estimated to be worth around $12.7 billion.
In early July, the company filed for an initial public offering. Authentic Brands CEO Jamie Salter stated that the company plans to go public in 2023 or 2024. He stated that he has agreed to continue as CEO for another five years after the company goes public.
In its IPO filing, Authentic Brands reported that its net income in 2020 increased by 2% to $211 million from $72.5 million a year earlier, while revenue increased by 2% to $489 million.
From eyeglasses manufacturer, Warby Parker and fashion rental platform Rent the Runway to eco-friendly shoe brand Allbirds and e-commerce fashion site Lulu's, a slew of retail startups have gone public in recent months. Investors have picked names with a strong online presence, allowing some to command values comparable to in-demand tech giants.
Sources with knowledge in the matter said Authentic Brands was aiming for a $10 billion valuation through its IPO. However, the company likely did not hit that target. Salter said in a recent interview that the company should have gotten a "massive valuation," but given the "ridiculous" IPO climate, he said the company would rather remain private.
The deal with CVC and HPS is anticipated to be finalized in December, after which the private equity company and hedge fund will each have a seat on the board of directors of Authentic Brands. BlackRock will maintain its position as Authentic Brands' largest shareholder, which it has had since 2019. Existing investors such as Simon Property Group, General Atlantic, Leonard Green & Partners, Brookfield, and basketball player Shaquille O'Neal will keep their stakes in the company.
CVC managing partner, Chris Baldwin, said they plan to work closely with Authentic Brands to executive their new strategy, which will include a stronger push for international expansion.
Department store chain Barneys New York, men's suit maker Brooks Brothers, and Sports Illustrated magazine are among Authentic Brands' portfolio of brands. Its agreement to purchase Reebok is anticipated to finalize early next year, adding another brand to its portfolio.
