Birkenstock shares dropped by more than 10% on the first day of trading Wednesday afternoon after the German sandal manufacturer completed the third largest US listing of the calendar year.
After a long period of slowdown, the market for initial publicly offeredhas recently gained momentum. Birkenstock’s tepid launch is a reminder that investors are still cautious in comparison to the exuberance seen in 2020 and 2021.
Arm, Instacart, and Klaviyo priced their large IPOs above or at the top of the target ranges in December. However, trading in these newly listed companies has been choppy ever since.
Birkenstock finished at $40.20 per share, nearly 13 percent below the initial offer price of $46 that was agreed upon on Tuesday evening. The price offered was in the middle of the previous target range.
Birkenstock’s market capitalisation is $7.6bn, based on the number of shares outstanding. Or $8.2bn when fully diluted.
Oliver Reichert said, Birkenstock’s chief executive: “With a heritage that dates back to 1774, we are a business focused on sustainable long-term growth, and this is reflected by our shareholder base.”
The deal raised nearly $1.5bn in total for L Catterton and the company. A third of the proceeds raised will be used to pay off debt by the company, and the remainder will go to L Catterton.
The listing came less than three years since L Catterton, backed by French luxury clothing house LVMH bought a majority share in a deal valued at around €4bn.
Financiere Agache is the holding company owned by LVMH’s chief executive Bernard Arnault. It has agreed to purchase up to $325mn in Birkenstock stock as part of this IPO. Arnault’s son Alexandre, will then join Birkenstock’s board after the deal closes.
Durable Capital Partners and Norway’s sovereign fund have also agreed to act jointly as cornerstone investors by purchasing up to $300mn of shares.
Birkenstock’s revenue for the nine-month period ending June was €1.1bn, an increase of 21 percent on the previous year. Net profits fell by 20 per cent, to €103mn.
LVMH’s disappointing earnings report earlier on Wednesday sparked concern among some analysts about the end of a luxury boom post-pandemic. The shares of the French group fell almost 7 percent after it reported a slowing in sales growth for the third quarter.
The Nasdaq listed Oddity Tech, an online beauty retailer in July.
The recent fall in volatility and the rise in share prices has encouraged a tentative recovery in listing in recent months. However, investors and bankers caution that they don’t expect to see a return to normal volume until at least early 2024.