German Online Fashion Retailer Zalando Plans to IPO

By Aaron Ricadela  

Photographer: Martin Schutt/AFP via Getty Images

Employees of the internet retail company Zalando work at a logistics center in Erfurt.

Zalando SE, Europe’s largest online shoe and fashion retailer, plans to sell as much as 11 percent of its shares in an initial public offering this year, marking the first major IPO for Berlin’s startup industry.
The seller of products from $2,000 designer dresses to Adidas AG (ADS) German soccer jerseys plans to sell a stake of 10 percent to 11 percent in the
second half on the Frankfurt stock exchange, Zalando said in a statement. The offering may value the company at 4 billion euros ($5.3 billion) to 5 billion euros, people familiar with the matter have said.
Germany hasn’t witnessed a big technology IPO since Deutsche Telekom listed its dial-up Internet business in 2000 and Zalando represents the country’s most significant e-commerce initial share sale to date.
“Reaching break-even in the first half of 2014 is an important milestone, proving once more the attractiveness of our business model,” said Rubin Ritter, a management board member. The IPO is the “logical next step in Zalando’s evolution as it, in combination with raising additional capital, provides us with more flexibility to pursue our long-term growth ambitions.”
Berlin has been the site of a vibrant startup scene that includes music streaming service SoundCloud Ltd. and scientific paper portal ResearchGate. The city’s Earlybird Venture Capital GmbH has attracted a co-founder of LinkedIn Corp. And Google Inc. (GOOG) has added a European venture capital office in London to tap emerging companies in Berlin, Paris and elsewhere.

Rocket Internet

Zalando, which sells in 15 European countries, was forged from the Berlin-based Samwer brothers’ Rocket Internet incubator. Rocket replicates existing e-commerce business concepts, mainly from Silicon Valley, in markets outside the U.S. and China -- from Brazil to Nigeria to Myanmar. Zalando was one of those businesses.
The Zalando offering will consist solely of new shares, as all of the existing owners will remain invested. The top five investors in the company are Investment AB Kinnevik, Global Founders, Anders Holch Povlsen, DST Europe and Holtzbrinck Ventures. Zalando also said it signed a credit line worth 200 million euros for a five-year period to be used for general purposes.
Zalando’s second-quarter net income was 29 million euros, compared with a 33.5 million-euro loss a year earlier.
The sale is being managed by Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse Group AG. Deutsche Bank AG and JPMorgan Chase & Co. have also been mandated as joint bookrunners, Zalando said today.