Authentic Brands Group is postponing its planned initial public offering thanks to a couple of new deep-pocketed partners.
The New York-based brand marketer said CVC Capital and HPS Investment Partners, along with its current stable of shareholders, have signed definitive agreements to purchase significant equity stakes in the company in a transaction that values it at $12.7 billion in enterprise value.
BlackRock, which has been ABG’s largest shareholder since 2019, will retain its majority position. Simon Property Group, General Atlantic, Leonard Green & Partners, GIC Private Ltd., Brookfield Property Partners, Lion Capital, Jasper Ridge Partners and Shaquille O’Neal will continue to hold significant equity positions in the company.
As a result, “we’ll be pushing the IPO to sometime in 2023 or 2024,” said Jamie Salter, founder and chief executive officer. ”This is a significant investment that has turned over our shareholder base — 50 percent is new money and 50 percent is old money that rolled over.”
He said he remains the largest individual shareholder in the company, but the private equity firms have bigger stakes. All told, ABG’s management team retains around a 20 percent interest.
”The investors are taking money off the table,” he said, “which is normal for a private equity firm. They can either do it this way or through an IPO.”
According to Salter, even though the IPO is being delayed, the company’s goals have not changed. “We pursued an IPO so that we could bring value to ABG and its shareholders. We are achieving exactly that with the onboarding of new equity partners.”
Without the scrutiny of the Securities and Exchange Commission, which would have been the case as a public company, Salter said: “We’re free to do whatever we want. We just made a deal for Iconic Images last week and Reebok closes on Feb. 28. And we expect to make a significant acquisition before the end of of the year.”
In addition, ABG is negotiating to purchase a fashion brand in the first quarter of 2022, he added, declining to reveal details.
“We have known CVC and HPS for many years and are thrilled that they are coming on board as significant stakeholders in ABG,” Salter continued. “Their commitment is a testament to the exceptional work our team has put forth as well as CVC and HPS’ confidence in our future growth. The entire ABG team — from our leadership to the director of first impressions — has done an incredible job of building a sustainable and scalable business with a laser focus on brand development, digital innovation, e-commerce, specialty retail, expansion into new verticals and proven business models.”
“The investments from CVC Capital and HPS Investment Partners are a strong vote of confidence in ABG’s long-term vision and strategic approach,” said Nick Woodhouse, president and chief marketing officer of ABG. “We are primed to continue furthering our global presence, acquiring new entertainment and lifestyle brands and driving organic growth for our portfolio.”
Salter founded ABG in 2010 and has built a portfolio of more than 30 brands in fashion, luxury, outdoor, home, entertainment, events, media and fine arts sectors. The company’s latest high-profile acquisition of Reebok will bring ABG’s portfolio to more than $20 billion in retail sales annually with global distribution in more than 150 countries.
Upon closing of the transaction, which is expected in December, representatives from CVC and HPS will join ABG’s board.
“We have followed ABG’s success story for several years and are delighted to be partnering with the company and its investor group,” said Chris Stadler, a managing partner at CVC. “The power of the ABG platform is evident in its growth to date, and we believe the company is only beginning to realize the full benefit of its scale and diversification. We look forward to working with Jamie, Nick and the talented team at ABG to create even greater value together.”
“ABG has shown that its unique business model can successfully innovate and grow brands across a broad spectrum of consumer categories, and we are excited to leverage CVC’s experience in the consumer, retail and media and entertainment sectors to support the company’s growth ambitions,” said Chris Baldwin, a managing partner at CVC. “We plan to work closely with the ABG team to execute on their strategic priorities, particularly around international expansion, given our extensive global footprint and experience in local markets around the world.”
“We are thrilled to partner with Jamie and his outstanding team, who we have known for nearly a decade, to support ABG’s ongoing development and growth strategy as it continues to lead the market in the brand licensing arena, underpinned by a highly differentiated and innovative acquisition and brand management platform,” said Scot French, a governing partner of HPS.
In August 2019, BlackRock became the largest shareholder in ABG when it invested $875 million through its Long Term Private Capital arm.
Since then, ABG has put plans in motion for an IPO. The paperwork was filed in the summer and was expected to value the company at around $10 billion, marking the entrance of a major new Wall Street player. That valuation put ABG right above Under Armour Inc. (with a market capitalization of $9.3 billion), Ralph Lauren Corp. ($9.1 billion), Kohl’s Corp. ($8.9 billion) and Capri Holdings Ltd. ($8.2 billion).
Although the IPO had been expected to be completed by this summer, the Reebok deal delayed it, sources said. Now it is two to three years down the road.
In August, ABG inked a deal to buy Reebok from Adidas for up to 2.1 billion euros. The German activewear firm said ABG would pay the bulk in money at the closing of the transaction and the rest would be comprised of deferred and contingent consideration.