Online fashion retailer Zalando to list 10-11 percent stake

By Emma Thomasson and Arno Schuetze

BERLIN/FRANKFURT (Reuters) – Europe’s biggest online fashion player Zalando announced plans to list a stake in the business in hopes of raising more than 500 million euros (398.72 million pounds) to fund further expansion.

Zalando said on Wednesday it wanted to list a stake of 10-11 percent on the Frankfurt stock exchange this year, which could value the company at about 6 billion euros in one of Germany’s biggest tech flotations for years.

The listing comes amid a flurry of e-commerce flotations this year, with Chinese giant Alibaba set to list this month as well as German venture capital firm Rocket Internet which helped launch Zalando and many other start-ups.

Zalando – which unveiled a new advertising campaign, website, packaging and apps at its first-ever news conference last week – said the offering would consist solely of new shares from a capital increase. Its current shareholders will not be cashing out, it added.

It had previously been expected to list a bigger stake but markets for technology stocks have since turned more negative.

A source familiar with the transaction said Zalando aimed to raise over 500 million euros with the offering. The pricing for the initial public offering (IPO) will be set the week of Sept. 29, the person added.

Zalando, in which Sweden’s Kinnevik is the biggest investor with a 36 percent stake, posted a 29.5 percent gain in first-half sales to 1.047 billion euros and it made its first-ever operating profit – 12 million euros compared with an operating loss of 72 million a year ago.

Zalando board member Rubin Ritter said the initial public offering was the next logical step for the company’s development as it gave it flexibility to pursue its long-term growth ambitions.

Kinnevik Chief Executive Lorenzo Grabau said his firm was very pleased about Zalando’s plans.

“We look forward to continuing to work with Zalando’s founders and management team, and to support their future growth ambitions after the listing,” he said.

Zalando, which began selling shoes in 2008, now ships 1,500 brands to customers in 15 countries, gaining widespread visibility with its “scream for joy” slogan and ads showing delighted customers tearing open Zalando packages.

Zalando’s most direct competitor is Britain’s ASOS, which has seen its shares fall sharply this year after a profit warning and a warehouse fire, although they jumped on takeover speculation last week.

Zalando now has a total staff of 7,000 people, with an average age of just 29. More than 40 percent of its traffic comes from mobile devices and its total number of active customers rose to 13.7 million from 11.6 million a year ago.

The retailer, which makes 60 percent of its sales in Germany, Switzerland and Austria, still sees huge potential to grow further given that the European fashion market is worth 420 billion euros.

Morgan Stanley, Goldman Sachs and Credit Suisse are coordinating the IPO, while Deutsche Bank and JP Morgan are joint bookrunners. Jefferies and Stifel Nicolaus Europe are Co-Lead Managers.

(Reporting by Emma Thomasson; Editing by Maria Sheahan)

Online fashion retailer Zalando to list 10-11 percent stake