Authentic Brands Group has made it official, submitting the registration paperwork for an preliminary public providing with the Securities and Exchange Commission.
As WWD reported final month, ABG had confidentially revealed its plans to go public on the finish of May in a deal that might worth the agency at $10 billion. ABG didn’t specify a share worth or what number of shares could be bought on the general public market, however did set a proposed most aggregated providing worth of $110 million.
The S-1 paperwork filed late on July 6 is the primary a part of a multistep course of for going public the place firms will present estimates on how a lot they’re hoping to boost and the share worth nearer to the date of the official public providing, which on this case is anticipated to be someday towards the top of this month.
But the doc did present a peek into the funds of the model advertising agency.
In 2020, ABG’s complete revenues had been almost $489 million, up from greater than $480 million a yr earlier, or $165 million in 2016, most of which got here from licensing revenues over the past 5 years. The firm made greater than $225 million in 2020 consequently, up from $96.5 million in 2019.
It additionally mentioned that based mostly on a overview of potential industries it may well broaden into, it estimates the overall market alternative for ABG is about $13 trillion in gross market worth at retail sooner or later.
Outside companies BlackRock, Leonard Green & Partners, General Atlantic, Simon Property Group and Lion Capital personal greater than 5 % of the corporate. So does chairman of the board and chief government officer Jamie Salter, chief advertising officer Nick Woodhouse, chief monetary officer Kevin Clarke and chief working officer Corey Salter, considered one of Jamie Salter’s sons.
Last yr the CEO acquired almost $44 million in complete compensation, together with a base wage of $1.7 million and almost $35 million in inventory choices.
In a administration dialogue part of the 194-page doc, the corporate described itself as an “asset-light…brand development, marketing and entertainment company” that owns the mental property and receives licensing revenues from its portfolio of 32 manufacturers that generated about $10 billion in annual income for the yr ended Dec. 31, 2020. Among its holdings are Nautica, Brooks Brothers, Barneys New York, Spyder, Aéropostale, Forever 21, Lucky Brand, Eddie Bauer and Sports Illustrated.
Since its founding by Jamie Salter in 2010, ABG has remodeled 30 acquisitions, together with 19 over the previous 5 years, in keeping with the doc. But even ABG was not proof against the results of the pandemic.
“Between 2015 and the first quarter of 2021, we achieved an organic growth median of 7.6 percent, driven by the strong performance of our existing brand portfolio,” the doc detailed. “In 2020, we experienced an 8.8 percent decline in organic revenue growth due to the impacts of COVID-19; however, this decline was offset by an increase in licensing revenue that was largely contributed by brands we acquired in 2019 and 2020. We leverage the strong consumer recognition and attractive positioning of our brands through a global network of 1,000 licenses across approximately 800 licensees, including manufacturers, distributors, wholesalers, retailers and e-commerce partners, to help drive organic growth in our business. In 2020, 79 percent of our licensing revenue came from North America, while 21 percent came from the rest of the world.”
ABG operates in 136 nations and is within the “early stages of establishing a large footprint” in worldwide markets the place it sees important progress alternatives, it mentioned.
All advised, licensing income accounts for over 70 % of the corporate’s adjusted EBITDA, or $13.5 billion in gross sales in 2019 and $9.7 billion final yr, it mentioned. Lifestyle manufacturers represented 82 % of income final yr and 85 % for the three months ended March 31, 2021.
E-commerce gross sales by way of its licensees, which ABG referred to as “an area of strong growth for us,” represented 18 % of gross sales in 2020.
The leisure arm of the enterprise — a class Jamie Salter has recognized as a significant supply of future progress due to their long- and short-form content material, stay occasions, hospitality and immersive experiences — represented about 18 % of income in 2020 and 15 % within the three months ended March 31 of this yr.
Looking forward, the corporate mentioned it is going to proceed to hunt out manufacturers which might be “powerful and have enduring global appeal; exhibit meaningful organic growth potential, and are synergistic to our existing portfolio of brands.” As reported, ABG is within the working to buy the Reebok model from Adidas, as are a variety of non-public fairness companies, and the successful bidder is anticipated to be finalized earlier than the top of this yr.
The doc revealed that ABG now owns a 50 % stake in SPARC, its partnership with Simon Property Group and its largest licensee. At the top of 2019, ABG had owned 27.15 % of SPARC however elevated that stake by shopping for out Brookfield Properties’ curiosity for $30.4 million in January 2020. SPARC operates Nautica, Forever 21, Aéropostale, Lucky Brand and Brooks Brothers and generated $2.6 billion in international gross sales in 2020 — 7 % of ABG’s complete income — and $850 million by way of the primary three months of this yr, or 11 % of complete income.
The doc mentioned ABG plans to make use of a portion of the online proceeds from the IPO to repay debt and “fund brand acquisitions,” primarily within the way of life and leisure house. Other plans for the longer term embrace introducing its manufacturers into new distribution channels through which its present licensees don’t function. As an instance, ABG pointed to Shaq’s Fun House, a recurring occasion hosted by the corporate’s Shaquille O’Neal model at main sporting and leisure occasions such because the Shaq Bowl on the 2021 Super Bowl.
It additionally plans to launch a loyalty membership program that would come with manufacturers all through its portfolio to supply prospects reductions and perks for a month-to-month subscription worth, and likewise provide a co-branded bank card.