Bankers were convinced that Golden Goose, maker of the $500 distressed-look sneakers favored by Taylor Swift, was ready to become a publicly traded company.
After more than ten months of preparation, the Italian shoe brand wanted to raise around €600 million on Friday through a stock exchange listing in Milan. It reported strong sales for the first quarter. No fewer than seven banks were busy building their IPO book, which was oversubscribed on Tuesday. Fund manager Invesco had agreed to be a cornerstone investor.
But Francesco Pascalizi, the dealmaker responsible for the investment at private equity owner Permira, suddenly developed cold feet.
Permira’s decision to withdraw its long-awaited listing late Tuesday shocked advisors and investors who had committed to the fundraising. It was a blow to the tentative recovery of the European IPO market, and more companies that had planned an IPO this year may now err on the side of caution and postpone their plans in the wake of the aborted IPO.
The last-minute collapse also underlines Permira’s nervousness after a string of underperforming listings, including Dr. Martens in 2021. The boot maker has since issued five profit warnings and its shares have fallen 80 percent.
The discussions that led to the decision were difficult, according to several people directly involved in the preparations for the stock exchange listing. The disagreements between advisors and their private equity clients led to “long and heated discussions,” an insider said.
“With all due respect, what the hell are you talking about,” an adviser said during a phone call Tuesday, according to other people on the line.
“It looks bad to pull back two days before debut, but it looks even worse if the shares plunge 20 percent in the first week of trading,” one banker noted on Wednesday.
“Permira cannot afford another shame after Doctor Martens,” said another.
Executives at the London-based €80 billion buyout group began to worry last week, according to people close to the talks. Shares in LVMH and puffer jacket maker Moncler fell after French President Emmanuel Macron’s surprise decision to call early parliamentary elections, raising the prospect of a far-right government leading the euro zone’s second-largest economy.
As investors reduced their exposure to European stocks, “big names that had committed tens of millions” to Golden Goose’s IPO canceled their orders, a person close to the talks said.
It didn’t help that major investors like BlackRock and GIC stayed away, according to people with knowledge of the bookbuilding. Permira feared an aftermarket sell-off, people close to the buyout group said.
Bookrunners, however, continued to the end: the investor mix was strong enough to continue, they argued. To be fair, the IPO price would be around the lower end of the range at €9.75 per share, valuing the company at less than €2 billion – much lower than the €3 billion previously speculated.
But for that price, the book was subscribed to about four times. And the company’s top management, led by Silvio Campara, believed the valuation was “fair”, as did Permira, three people said.
The private equity group bought Golden Goose, headquartered near Venice, just before the pandemic led to global lockdowns, with Italy one of the worst hit countries.
While the global luxury sector faces a slowdown this year, Golden Goose reported a 12 percent increase in sales in the first quarter.
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However, Permira’s track record was a sensitive issue, market participants said. French cybersecurity company Exclusive Networks, which listed it in 2021 at €20 per share, now trades for just €19. TeamViewer and Allegro, which the company took public in 2019 and 2020 respectively, are both trading below their IPO prices.
Permira sold the last of its stake in Hugo Boss in March 2015, shortly before the share price fell sharply, which is now more than 60 percent below where it was when the buyout group withdrew.
Permira had initially tried to bring large institutional Asian investors on board, but failed, according to three people familiar with the talks. For example, Singaporean GIC was approached to invest in the deal as an investor, but decided against it. GIC declined to comment. Another opt-out was BlackRock, the people said. BlackRock was not immediately available for comment.
“The risk of this turning into a mediocre IPO outweighed the benefit of going ahead,” said one participant.
Permira could try to revive the listing in the coming weeks, some advisers said. But the decision not to proceed may have taken the momentum out of the entire IPO market in Europe. Other stock market candidates are also thinking twice about their plans, including Tendam, a Spanish retailer owned by private equity. Tendam declined to comment.
However, Campara said he hoped preparations for the IPO would not be lost.
“Golden Goose is an amazing story about love and our priority has always been to tell this story to the right community of investors,” he told the Financial Times after the decision to postpone the company’s listing. The roadshow ensured that investors “saw Golden Goose not only as a strong and profitable company, but also as a truly next-generation global luxury company.”