Gymshark, the British online athleisure brand established in 2012 by founder Ben Francis from his parents’ home while he was a student is reportedly stepping up for a London IPO now expected to take place within the next few months. Sky News has reported Gymshark has initiated talks with bankers to run the IPO and institutional investors who might be expected to participate in it.
The news will be welcomed by the London Stock Exchange after a flurry of negative headlines this week around flagging investor appetite for IPOs. After the first three quarters of 2021 saw a flurry of IPO activity with 85 listings raising over £13.7 billion, enthusiasm has waned as we move deeper into autumn. The recent Eurowag IPO saw the Czech ‘Uber of trucking’ first accept a knock-down valuation well below its initial target before then seeing that disappointment compounded by an early drop in its share price as stock started trading.
Roof tiling company Marley and the REIT Responsible Housing have both recently announced they will no longer go ahead with their respectively planned £500 million and £250 million IPOs, citing ‘market turbulence’, which is generally accepted as code for ‘lack of investor interest’.
Other major e-commerce retailers like THG, Boohoo and Asos, which have seen their valuations soar over the past couple of years, have also all seen their valuations recently suffer sharp declines.
However, those market signals don’t appear to have dampened Gymshark’s belief there will be strong interest in its own IPO. Founder Francis, who has confidently stated he wants to grow his company into a UK-based Adidas or Nike, started the company by sewing gym wear like muscle vests and hoodies on a sewing machine his mother taught him to use. At the time he was a student at Aston University and also worked nights at Pizza Hut.
If the IPO goes ahead as planned in the coming months, could soon be worth as much as £700 million, though no statement has been made about the valuation that will be targeted. Gymshark has 5.4 million Instagram followers and cleverly leverages ‘social selling’ using influencers. Over the financial year ending this July, the company’s sales grew to £400 million from £260 million the previous year – growth of over 50%.
A new U.S. office has been opened in Denver and employs 130 people and a number of new senior executives have recently been poached from rival brands like Lululemon. Mr Francis is still the majority shareholder despite selling a 21% stake to U.S. private equity firm General Atlantic at a company valuation of £1 billion. The £200 million raised is now funding accelerated expansion in the USA, the region where Gymshark makes the most sales, and growth in Asia.
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