勃肯(BIRK.US)“不合时宜”的上市 扼杀了美股IPO市场刚刚起步的复苏?

Has the “untimely” listing of Birk.US (BIRK.US) stifles the fledgling recovery of the US IPO market?

Zhitong Finance ·  Oct 16, 2023 09:46

Zhitong Finance App learned that last week, the footwear brand BIRK.US (BIRK.US), which has a history of 249 years, officially entered the US stock market. However, although the company received much attention before listing, its debut was frequently thwarted. This result may stifle the initial rebound in the IPO market.

The cork-soled sandal maker closed down 12.6% on Wednesday, setting the worst first-day record for a US IPO valued at at least $1 billion in more than two years. Since AppLovin (APP.US) fell 18.5% on the first day of listing in April 2021, there has been no such poor listing performance.

The poor timing of the listing seemed to offset the company's conservative pricing strategy and reliance on anchor investors. This also overshadows the recent sales growth brought about by the Hollywood blockbuster “Barbie.”

Nicholas Smith, senior research analyst at Renaissance Capital, said that this IPO “is definitely not the IPO that Birken hoped for.” He added that the current market is more picky and risk-averse, particularly in the consumer sector.

When it comes to IPOs, timing is sometimes everything. For example, the investor roadshow for Birken's current IPO was blocked by a possible shutdown of the US government, public holidays in Germany and the US, delays in listing of some European companies, and the outbreak of war in Israel.

These factors, along with the disappointing performance of LVMH, an indirect supporter of Birken, affected the performance of its IPO a few hours before the opening of the US stock market.

According to information, LVMH and its holding family are partners of Birken's owner L Catterton. LVMH previously reported revenue growth of 9% in the third quarter, falling short of analysts' expectations of 11.9%. The company said that after experiencing a post-pandemic boom period, consumer spending is declining, particularly in Europe. This performance has dragged down the stock price performance of other luxury goods stocks.

People familiar with the matter said that this overshadowed some investors' views on Birken after the closing at noon last Tuesday, and may have dragged down the company's first-day trading. People familiar with the matter also pointed out that since the market has been affected by the situation in the Middle East, some larger investors are reconsidering their interest in the industry.

A representative of Birken declined to comment.

Cancelling the IPO

In fact, long before Birken's IPO, fluctuations in global stock markets in early October had already begun to shake investors' confidence. Private equity firm Triton had earlier delayed plans to sell shares in military transmission manufacturer Renk AG. A few hours before the start of trading of Birkenstock's new shares, French software company Planisware postponed its IPO at the Euronext Paris, citing the challenging market environment.

People familiar with the matter said that at the pricing meeting last Tuesday, Birken and its private equity owner L Catterton decided to set the IPO issue price at 46 US dollars, slightly below the midpoint of its pricing range of 44 US dollars to 49 US dollars, in order to ensure a “big increase” on the first day of listing.

However, even at $46, that price might be too expensive compared to its peers. Bloomberg Intelligence analyst Abigail Gilmartin said that this price means that the company's valuation is 4.9 times the forward market sales rate. In contrast, the forward market sales rate of its footwear peers is only twice that of its footwear peers.

Also, like other companies that have already carried out IPOs this fall, Birken has arranged to anchor investors as part of a strategy to stabilize the offering by securing demand.

However, anchor investors did not secure a winning ticket to recent IPOs. Instacart (CART.US) also tried this strategy, but the company's current stock price is still 15% below the IPO price. Josef Schuster, founder and CEO of IPOX Schuster, said this may be because these anchor investors don't necessarily need to hold their shares.

“We've also seen that some cornerstone investments aren't subject to any lockdown requirements, so by default this configuration doesn't reduce liquidity,” Schuster said.

Birken's preference for allocating 90% of its IPO shares to investors who only do more is also somewhat controversial. The company and L Catterton insisted right from the start, even before the roadshow began, that what they wanted was a group of investors who would strongly go long and not interested in “short-term” capital (i.e., hedge funds). People familiar with the matter say they rarely meet with hedge funds or alternative asset management companies.

They added that this decision could eventually put downward pressure on the stock, as the needs of the long investors have been met during the IPO process, so they won't be snapping up the stock on the open market.

Rubrik, Turo

On Thursday and Friday, Birken's stock price fell further, increasing by nearly 21% compared to the IPO price drop. This reduced the company's market value to around $6.8 billion.

The stock's poor performance is beginning to prompt other companies planning to go public in the near future to reconsider their schedules.

According to people familiar with the matter, those that have postponed their IPO plans include Rubrik Inc., a cloud and data security startup backed by Microsoft (MSFT.US), and car-sharing company Turo Inc. The IPO dates for Rubrik and Turo are currently undecided and are still subject to change.

Rubrik and Turo's representatives did not respond to requests for comment.

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