German fashion group CBR planning listing next month

An outlet of the women’s fashion group CBR in Frankfurt. The firm, which had over €600mn of revenues, is planning an IPO later this year.Reuters/FrankfurtGerman women’s fashion group CBR, known for its Street One and Cecil brands, is planning an initial public offering (IPO) later this year, the company said yesterday. The flotation will comprise new shares worth about €200mn ($226mn) issued in a capital increase as well as shares worth €200mn-€300mn owned by private equity group EQT, a person familiar with the deal said. The listing, expected to value CBR at roughly €1.4bn including debt, is expected to take place in early July, the person said. Swedish EQT is joining a raft of private equity groups seeking to take advantage of surging stock markets to exit investments made before the financial crisis. Nonetheless, CBR said EQT would keep a significant stake following the IPO. EQT bought CBR from buyout groups Apax and Cinven in 2007 for about €1.5bn. At the time, net debt stood at €1.2bn, which has been reduced to €500mn. Last year, CBR posted adjusted earnings before interest, tax and amortisation of €105mn, having increased its core earnings by 7% annually since 2012. Retail fashion companies such as H&M, Inditex , Next, Marks and Spencer, Fast Retailing and Esprit trade at an average of 11.6 times expected core earnings. CBR had just over €600mn of revenues from the sale of shirts, trousers and scarves of the Street One brand targeting younger women and of the Cecil brand with its focus on more mature women. The company’s margin tops that of peers such as Tom Tailor , Gerry Weber and Esprit, among others, because its wholesale focus means it needs very low levels of working capital. It also benefits from tax losses carried forward and goodwill amortisation of €140mn a year, the person said.  The company plans to use some of the proceeds from the initial public offering to further reduce its leverage, but also for investment in its ecommerce business and CBR-owned retail outlets. So far, wholesale activities account for 85% of revenues, while ecommerce and retail sales through its own shops account for the rest. CBR’s management has not held talks with prospective buyers of the company, a second person familiar with the company said. A situation similar to that at perfume retailer Douglas, which was snapped up by buyout group CVC while preparing an IPO is therefore seen as unlikely, the person said.