Germany's largest online fashion retailer Zalando AG announced plans for what could be one of the biggest tech initial public offerings in Europe since the financial crisis.
Zalando said it would aim to list in Frankfurt by the end of the year, but declined to give any further details about timing, at a time when the blockbuster IPO of China's Alibaba Holdings is dominating the thoughts of many tech investors.
The company, which started life only six years ago as an online shoe shop, now sells a much broader range of clothes in 15 countries across Europe, with nearly 14 million active customers.
A spokesman for Zalando confirmed that none of the company's long-term investors would be selling shares in the offering.
Earlier this week, it said it posted an operating profit in the first half of 2014 for the first time, as earlier investments in mobile apps and marketing started to pay dividends. Revenue grew 30% from the first half of 2013 to €1.05 billion ($1.38 billion). It still expects a small operating loss this year, however.
Swedish investment company Kinnevik, which is Zalando's biggest shareholder with 36%, said Zalando expects an offering of around 10%-11% of post-IPO capitalization. Kinnevik had estimated the company's fair value at around €3.9 billion at the end of December. Allowing for growth since then, analysts projected the IPO size could reach around €500 million.
"Going onto the stock market was the next logical step in Zalando's development," chief financial officer Rubin Ritter said in a statement. "Raising new equity will give us flexibility for long-term growth."
In addition to the stock issue, the company also said it had arranged a €200 million five-year credit line for 'general corporate purposes'.
Morgan Stanley, Goldman Sachs and Credit Suisse will be joint global coordinators and joint book runners for the deal. Deutsche Bank and JP Morgan will be joint book runners, while Jefferies and Stifel Nicolaus Europe will act as co-lead managers.
(CORRECTION: An earlier version of this story incorrectly reported that Zalando's existing shareholders will maintain their current stakes by buying shares at the IPO)
Started in 2008 with shoes.
Now present in 15 countries, broader range of clothes