Authentic Brands IPO: What you should know about Authentic Brands

Authentic Brands is the parent company of high-profile consumer businesses such as Reebok and Hervé Léger. Here’s the lowdown on the organisation’s background and growth strategy in advance of the eagerly-anticipated Authentic Brands IPO.

Authentic Brands IPO: What do we know about the Authentic Brands IPO?

Authentic Brands filed for its IPO in July 2021, with initial reports indicating the company’s plan to raise $100 million, although subsequent information suggests the amount may be considerably more. The valuation of the company could be as high as $10 billion by the time the transaction has completed, however the share price range has not yet been disclosed.

The listing will offer Class A shares for public purchase and Class B shares issued to selected executives, which will offer more comprehensive voting rights.

Bank of America, JPMorgan Chase, and Goldman Sachs will be overseeing the IPO.

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How to trade Authentic Brands

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How much is Authentic Brands worth?

Authentic Brands is likely worth in excess of $3 billion at this point, going by its valuation of $3.1 billion following its $875 million raise in 2019. It is difficult to ascertain exactly how the valuation has grown since then without the insight gained from subsequent fundraising, but the company has made a range of strategic acquisitions that have since boosted its coffers through increased licensing revenues.

What is Authentic Brands?

Authentic Brands is a New York-based brand management company with holdings across a wide range of consumer brands, including fashion and luxury brand Hervé Léger, athletic wear company Reebok and home furnishings operator Henredon. The company also owns shares in the estates of a range of celebrities, from basketball star Shaquille O’Neal to actress Marilyn Monroe.

The company was founded in 2010 by Canadian businessman and corporate restructuring specialist Jamie Salter, who was able to raise $250 million for the new venture largely through private equity outfit LGP. The investment was put towards the acquisition of clothing brands Silver Star and Tapout, as well as the rights to the likeness of Monroe.

By 2017, the company had grown to 29 brands. That year, it took on funding from General Atlantic in order to continue to broaden its portfolio. The next equity raise of $875 million came from Blackrock in 2019, with a further raise of $600 million following in 2020.

As of October 2021, Authentic Brands has more than 1,300 employees with the parent company seeing revenues of $489 million for the 2020 period.

Who are Authentic Brands’ competitors?

Authentic Brands’ de facto competitors include other holding companies such as Marquee Brands and WHP Global, which broadly share a mission to acquire struggling but well-recognised consumer brands in a bid to change their fortunes.

WHP Global’s portfolio accounts for more than $3 billion in retail sales. Its latest purchase was the March 2021 acquisition of Tru Kids, the parent company of Toys R Us, but in recent years also swooped for fashion operators Joseph Abboud in 2020 and Anne Klein in 2019. Meanwhile, Marquee Brands’ portfolio includes watersports apparel brand Body Glove, UK clothing brand Ben Sherman and US sportwear company Dakine.

How does Authentic Brands make money?

Authentic Brands makes money through licensing fees accrued from its portfolio of brands. The portfolio as a whole generates some $15 billion in gross merchandise value. The company also brings in revenue from royalties when other parties use names, images and likenesses for which Authentic holds the rights.

What is Authentic Brands' business strategy?

Authentic Brands is focused on an aggressive acquisition strategy that aims to bolster its existing portfolio and scale its licensing revenue in turn.

Today’s difficult retail landscape has caused brick-and-mortar (B&M) operators to struggle with challenges ranging from decreasing in-store traffic to prohibitive rent hikes. The climate, exacerbated by the Covid pandemic, has culminated in Authentic Brands snapping up beleaguered operators for discount prices with intent to rejuvenate the ailing brands.

To this point, Authentic Brands has sought to make its portfolio companies leaner, focussing on maximising their most profitable areas and seeking improvements in areas ranging from branding and product design through to supply chain management. Examples of such operations bought for a reduced sum include luxury retailer Barneys for $271.4 million in 2019, and fast fashion operator Forever 21, bought for $81 million in 2020.

Barneys, which was snapped up alongside B. Riley Financial following a liquidation process, was subject to new strategic plans including the introduction of pop-ups, new e-commerce operations and the licensing of the Barneys name to a competitor.

Forever 21 was acquired as part of a consortium involving Brookfield Properties and Simon Property Group, with a plan for a more targeted focus on trend-conscious design, speed to market and sustainability of supply chain.

In terms of future prospects, a climate where B&M operators continue to go to the wall may continue to produce the sorts of opportunities sought out by companies such as Authentic Brands. In that sense, market speculators interested in the holding company’s IPO could by proxy be eyeing a bet on a wider decline in business prospects in selected sectors.

Is Authentic Brands profitable?

Authentic Brands is currently profitable, according to its latest financial reports, with $223 million in net profit for the 2020 period on revenues of $489 million.

Who owns Authentic Brands?

The ownership of Authentic Brands is split between a range of individuals, such as the founder Salter, as well as financial institutions with equity stakes such as Blackrock, General Atlantic and GIC.

Board of directors of Authentic Brands

Jamie Salter – Founder, Chairman, CEO

Kevin Clarke – Chief Financial Officer

Corey Salter – Chief Operations Officer

Nick Woodhouse – Chief Marketing Officer

 

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