Could Farfetch be preparing for a 5 billion USD IPO?

London - Farfetch, the London-based online luxury retailer, is preparing itself for an IPO which could value the company up to 5 billion USD. The company is said to be in the process of hiring bankers to oversee its public listing in New York which could occur within 18 months, according to a report from Sky News.

The move sees the online luxury retailer moving up the timeframe of its flotation, although Farfetch is said to be keeping options for a potential listing in London open as well, according to bankers. The online luxury retailer was previously valued at 1.5 billion USD last year but has implemented a number of changes which have strengthened its goal of becoming the leading online fashion platform.

Farfetch prepares itself for a 5 billion USD flotation

For example, Dame Natalie Massenet, founder of Net-a-Porter joined the team at Farfetch this February as a non-executive co-chairman. Farfetch unveiled its new concept the Store of the Future in April, which aims to improve the physical retail experience and launched a 90-minute delivery service for selected Gucci items in London. An IPO is said to have been on the cards for a while now for Farfetch, but the company’s CEO and founder, Jose Neves, remains reluctant to share a formal timeframe.

"An IPO (initial public offering) is something we may consider in the future, but we are currently focusing on growing the business, with investors that fully support a business plan of investing in building THE technology platform for the global luxury industry,” said Neves in a statement in response to the reports.

Farfetch has been highlighted as one of the fastest growing tech start-ups to stem from the UK and if it does hit a 5 billion USD valuation which it lists, it will become of the most prized as well. Launched in 2008, the online luxury retailer, which offers consumers the chance to shop from a carefully curated network of boutiques and brands, has raised over 350 million USD in venture funding.

Early investors in the company include Conde Nast and Advent, who are likely to benefit greatly from a successful IPO. In addition, certain workers at Farfetch, which employs over 1,200 people in a dozen countries around the world, are also likely to do well in an IPO, thanks to the company’s employee share options. Other shareholders in Farfetch include Eurazeo, Vitruvian Partners and IDG Holdings.

A successful PO would help strengthen Farfetch position in the market to ensure it is able to stand its own against other leading fashion e-commerce companies like Yoox Net-a-Porter Group, which reported net sales of approximately 2 billion USD in 2016, and the newly launched 24 Sevres, held by luxury conglomerate LVMH.

Photo: Natalie Massenet and Jose Neves, courtesy of Farfetch