Authentic Brands raises $3 billion, pushes back IPO

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The company behind brands such as Brooks Brothers, Eddie Bauer, and Sports Illustrated magazine plans to delay its initial public offering after getting a big new investment from two private-equity firms.

Authentic Brands Group LLC, which develops and licenses its brands to retail operators, said Monday it sold stakes to CVC Capital Partners and HPS Investment Partners in a deal that values the company at $12.7 billion including debt.

The investment will deliver roughly $3.5 billion of fresh capital for Authentic Brands, with the largest piece of it coming from CVC, according to people familiar with the matter. The total also includes additional funds coming from existing investors, one of the people said.

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A pedestrian wearing a protective mask passes in front of a Brooks Brothers store on Madison Avenue in New York, U.S., on Saturday, Sept. 26, 2020. The pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40% in

It couldn’t be determined what percentage of the company CVC and HPS will own.

Authentic Brands, which had filed paperwork in July to launch an offering that would have listed its shares on the New York Stock Exchange, said it plans to put off an IPO until 2023 or 2024.

"ABG’s goals have not changed at all," a spokeswoman for the company said. "We pursued an IPO so that we could bring value to ABG and its shareholders. We are achieving exactly that with the onboarding of new equity partners."

Authentic Brands said CVC’s and HPS’s ownership stakes would be sold by some of its existing shareholders. BlackRock Inc.’s BLK 0.48% private-equity business will remain the owner of the largest share of Authentic Brands. Other shareholders include Simon Property Group Inc., SPG 0.75% Leonard Green & Partners, Singapore sovereign-wealth fund GIC Pte. Ltd. and former NBA star Shaquille O’Neal, whose personal branding Authentic Brands manages.

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Last year, Authentic Brands logged $488.9 million in revenue, growth of 1.8% year over year, despite the coronavirus pandemic’s hit to traditional shopping. Its net income was $211 million after distributions to non-controlling owners.

Authentic Brands, along with Simon and the real-estate arm of Brookfield Asset Management Inc., bought Forever 21 Inc. last year following its bankruptcy. Over the summer, it also agreed to buy Reebok from Adidas AG.

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Authentic Brands owns its brands’ intellectual property, controlling marketing and development. It makes deals with hundreds of licensees who source products, manage inventory and operate retail stores. Authentic Brand’s licensees have about 6,000 stores, with e-commerce sales representing about 18% of gross merchandise value last year.
 

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