Bankers were convinced that Golden Goose, maker of the tough-looking €500 trainers favored by Taylor Swift, was ready to go public.
After more than 10 months of preparation, the Italian shoe brand was looking to raise around 600 million euros in a listing in Milan as early as Friday. It had reported strong sales in the first quarter. No less than seven banks had built its initial public offering book, which was oversubscribed on Tuesday. Fund manager Invesco had agreed to be an underlying investor.
But Francesco Pascalizi, the trader responsible for investing in private equity owner Permira, suddenly got cold feet.
The firm’s decision to withdraw the long-awaited listing late Tuesday shocked advisers and investors who had committed to raising funds. It dealt a blow to the tentative recovery of Europe’s IPO market, and more companies that had planned a listing this year may now err on the side of caution and postpone their plans in the wake of the aborted abort.
The last-minute collapse also underscores Permira’s jitters after a string of underperforming listings, including Dr Martens in 2021. Since then, the bootmaker has issued five profit warnings and its shares have fallen 80 percent.
The talks leading up to the decision were acrimonious, according to many people directly involved in the listing preparations. The divergence of views between the advisers and their private equity client sparked “long and heated discussions,” according to an insider.
“With all due respect what the hell are you talking about,” one adviser said during a call Tuesday, according to other people on the line.
“It looks bad to pull out two days before a debut, but it looks a lot worse if the stock drops 20 percent in the first week of trading,” one banker said Wednesday.
“Permira can’t handle another embarrassment after Dr Martens,” said another.
Executives at the €80 billion London-based buyout group began to worry last week, according to people close to the talks. Shares in LVMH and puffer jacket maker Moncler were rocked after French President Emmanuel Macron’s surprise decision to call early parliamentary elections raised the prospect of a far-right government at the helm of the country’s second-largest economy. of the Eurozone.
As investors reduced their exposure to European stocks, “big names that had committed tens of millions” to the Golden Goose IPO canceled their orders, a person close to the talks said.
It didn’t help that major investors like BlackRock and GIC had stayed away, according to people with knowledge of the book-building. Permira feared a market sale, people close to the buyout group said.
Bookstores, however, were pushed to the bottom; The investor mix was strong enough to go ahead, they argued. To be sure, the IPO would price near the bottom of the range at 9.75 euros per share, valuing the company at less than 2 billion euros — well below the 3 billion euros previously speculated.
But the book was agreed to roughly four times that price. And the company’s management, led by Silvio Campara, believed the valuation was “fair,” as did Permira, according to the three people.
The private equity group bought Golden Goose, which is headquartered near Venice, shortly before the pandemic led to global lockdowns, with Italy among the hardest hit.
While the global luxury sector has faced a slowdown this year, Golden Goose reported a 12 percent increase in revenue in the first quarter.
“Dr Martens was a much lower price point and is more of an upper mass market product, [while] Golden Goose is a more accessible luxury and is able to build its own history,” said Mario Ortelli, a luxury-focused consultant.
However, Permira’s track record was a sensitive issue, market participants said. French cyber security company Exclusive Networks, which it listed in 2021 at 20 euros per share, is now trading at just 19 euros. TeamViewer and Allegro, which the firm went public in 2019 and 2020 respectively, both trade below their IPO prices.
Permira sold the last of its stake in Hugo Boss in March 2015, just before a sharp decline in its share price, which is now more than 60 percent below its level when the buyout group exited.
Permira had initially sought to bring in large Asian institutional investors but failed, according to three people familiar with the talks. Singapore’s GIC, for example, was approached to be an investor in the deal but decided against it. GIC declined to comment. Another exception was BlackRock, the people said. BlackRock could not immediately be reached for comment.
“The risk of this turning into a mediocre IPO was higher than the upside of going forward,” said one participant.
Permira may try to revive the list in the coming weeks, several advisers said. But its decision not to proceed may have taken the momentum out of the entire IPO market in Europe. Other listing candidates are also thinking twice about their plans, including Tendam, a Spanish private equity retailer. Tendam declined to comment.
Campara, however, said he hoped preparations for the IPO would not go to waste.
“Golden Goose is a great love story and our priority has always been to tell this story to the right investor community,” he told the Financial Times after the decision to postpone the company’s listing. The road show made investors “perceive Golden Goose not only as a strong and profitable business, but as a true Next Gen global luxury company.”