Zalando to raise up to 605 million euros in milestone IPO

ANALYSIS_ German e-tailer Zalando has finally priced its initial public offering (IPO) of shares at 21.50 euros a piece, at the top end of its initial price range, boosted by strong demand and adding expectation to the so-called most important week of stock sales in Germany over a decade. The set price comes in at the

higher end of the previously announced price range, hinting that Europe’s largest online fashion retailer expects to raise 605 million euros by selling up to 28.1 million shares - or 11.3 percent of share capital - the company said in a statement.

T

he Berlin-based company has said that it aims to raise between 507 million euros and 633 million euros from the IPO, including potential over-allotment shares, valuing the company at up to 5.6 billion euros, reported Reuters.

Zalando's stock not priced at highest price as the market is “overheated”

A source familiar with Zalando’s plans quoted by ‘Forbes’ said that the company did not price at the very top of its expected range because leaders at the fashion retailer see the current technology stock market as “overheated”.

In this vein, Zalando is reportedly wary that pricing too high could eliminate any first day trading pop, said the source, who also noted that Zalando’s decision-making was affected by Rocket’s impending trading debut.

After experiencing strong demand from investors, Zalando priced shares at the higher end of its expected range of 18 to 22.50 euros per share. The company sold at least 24.5 million shares to underwriters, who also have the option to purchase an additional 3.7 million shares in an over-allotment agreement.

If the over-allotment option is exercised in full, Zalando could raise up to 605 million euros and have a market valuation of about 5.35 billion euros, with the stock starting to trade on Oct, 1 on the Frankfurt Stock Exchange.

Investors in Zalando include Sweden’s Investment AB Kinnevik, the Samwer brothers – founders of Rocket Internet and active members of Zalando´s board - Global Founders fund and billionaires Anders Holch Povlsen of Denmark and Yuri Milner of Russia.

Zalando's second-quarter profit before interest and taxes (ebit) of 31.5 million euros on sales of 546 million euros and reported 2 billion euros in sales for the 12 months ended in June. The company gets more than half its revenue from Germany, Austria and Switzerland.

Angela González Rodríguez