Made.com, the online furniture retailer, is this week expected to fire the starting gun on a £1 billion London IPO. The company has reportedly signed up with Morgan Stanley, JP Morgan and Liberum, with the investment banks handling the listing.
Made.com was founded in Shoreditch, east London, in 2010 by Chloe Macintosh and Ning Li. Early progress was ‘bootstrapped’, with the two co-founders collaborating directly with designers and only manufacturing products when they had secured enough orders.
That’s still core to the successful business model and while it means customers usually wait at least 4 weeks, often more, for pieces of furniture like sofas, it also reduces the risk of excess production and the need to heavily discount stock that needs to be moved. Buyers may miss out on ‘sales’ but it does mean the original ticket prices of high quality, custom furniture pieces are lower than they would be if compensation for regular discounting had to be built in.
Made.com’s biggest backer is Lastminute.com founder Brent Hoberman, who stands to realise a multimillion return on his investment through the IPO. While Hoberman invested in Made.com at an earlier stage, the IPO will also see windfalls for the investors who participated in a £500 million fundraising round three years ago. That was led by U.S. private equity company Capital World. Other major shareholders include Partech and Level Equity, which own around 20% of the business each.
The 650 employees that were last year awarded share options by the company in recognition of their contribution to Made.com’s success during the pandemic will also see the value of their personal holdings rise significantly. Like many online retailers, Made.com benefitted from both the general shift to more online shopping during the pandemic and more time being spent at home motivating furniture upgrades.
Made.com has been linked with an IPO several times over the past few years but never progressed beyond serious consideration until now. The presumption is the company’s board and investors believe the time is now right to capitalise on its status as a “lockdown winner”.
Concerns of an economic sting in the tail following the pandemic as government support measures are wound down have been shrugged off by Made.com chief executive Philippe Chainieux. He recently said shoppers are now more comfortable buying more expensive “big-ticket” items online that sales have stayed strong despite the recent reopening of bricks-and-mortar retail venues.
Chainieux also says the business is now profitable. 2019 accounts, the last available, show a £19.3 million loss despite sales rising by 22% to £211.8 million. However, it can be presumed 2020 saw sales growth rocket, as was the case for most successful online retailers. Exactly how much the pendulum into profitability has swung in recent months will be revealed by the IPO prospectus.
Another large IPO is also more good news for the London Stock Exchange, which has hosted a number of significant tech flotations this year. The Deliveroo IPO was a disaster, with the meals delivery company’s value plunging after its market debut. But the City, investment bankers say, has recovered from that shock and there have been plenty more successful tech IPOs like those of cybersecurity company Darktrace, reviews platform Trustpilot, fintech PensionBee and Moonpig, the online cards retailer.
Gene-sequencing company Oxford Nanopore and international currency transfers fintech Wise are also expected to launch major IPOs this year.