The keys to Otto Group’s decision to float About You

ANALYSIS Unlike other e-commerce operators, About You hasn’t been able to capitalise on the online shopping boom brought by the pandemic. With their recently announced initial public offering of shares (IPO), the German retailer expects to be perceived as “a recovery play” by investors. “We were not a lockdown winner,” About You’s co-founder Tarek Mueller said in a recent interview. “Our offering is geared more toward going-out clothes—there wasn’t much going out during the lockdowns, but we believe that there will be a big post-Covid pickup in that category. Investors clearly see us as a recovery play.” The retailer’s leadership also said its appeal to younger shoppers and technology platform offered a compelling growth story to investors. “We are the only company in our sector that has a proven internationalization strategy,” Mueller told Reuters. While they haven’t confirmed the listing’s date, the company issued a statement in late May advancing that they intend to become public in the second quarter of the year, with a view to raise at least 600 million euros via a private placement. The newly created stock will trade on the Frankfurt Stock Exchange. Sources familiar with the offering cited by Reuters said it would value the business at around 3 billion euros. Deutsche Bank, Goldman Sachs, and JPMorgan are acting as joint global coordinators and joint bookrunners on the deal, with Numis Securities, Societe Generale and UBS Investment Bank also acting as joint bookrunners. Proven hybrid business model combines owned fashion with apparel tech outsourcing About You competes with Asos Plc and Zalando SE on the retail side, races against THG and Shopify Inc on the outsourcing of their technology to other fashion brands, allowing them to run their own online shops. Indeed, when THG Plc listed in the London Stock Exchange a few months ago, it did so with a similar model: They operate their own e-commerce channel while THG’s Ingenuity business helps other retailers run their digital offerings. This is the business model that is proving the most successful in this day and age. Digital giants such as JD.com, Alibaba and Amazon lead the pack, with specialised players including About You, gaining market share in their respective niches. Market expects About You to reach 5 billion euro valuation Analysts consulted by Reuters highlight that comparable rivals which are already trading as public companies, such as fellow German Zalando (ZALG.DE) and Britain’s THG (THG.L) on average trade at 2.8 times forward sales. Based on that and that About You current growth rates (Revenue in the year to February grew by 57 percent to 1.2 billion euros, and the company is hoping to grow by another 50 percent in the current financial year) after floating, Otto Group’s e-tailer could get a fair value of almost 5 billion euros. Image: About You official website Image: About You official website
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