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

CNBC reports that retail conglomerate Authentic Brands Group plans to shelve a planned initial public offering.

Authentic Brands would, instead, sell significant equity stakes in its business to private equity firm CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders, CNBC reported.

The deal is valued at roughly $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.

Early next year, its deal to buy sneaker maker Reebok is expected to close, adding another brand to its holdings.

The company had filed for an IPO in early July. But Authentic Brands Chief Executive Jamie Salter said it will target an IPO date in 2023 or 2024. He said he has signed on to be CEO for another five years.

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

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

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

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

When it filed to go public, Authentic Brands reported that 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.