Birkenstock IPO Aims for a $10 Billion Valuation as Anticipation Mounts for Debut
Key takeaways
- Birkenstock is aiming to achieve a $10 billion valuation
- Its share price is set to be between $44 and $49 but could achieve more at the debut
- Both Arm and Instacart’s IPOs have fizzled out after initial excitement
You saw Arm. You saw Instacart. But did you expect… sandals? That’s right, Birkenstock is ready for its IPO and aiming for as much as $10 billion for the premium-priced footwear brand.
That might seem steep, but investor excitement about the deal drought finally being over could buoy the company’s valuation to such heady highs. With luxury brands interested in investing, Birkenstock could be on to a winner and exceed expectations.
Let’s get into the details of what kind of pricing Birkenstock wants to achieve and how it could compare to other recent IPOs.
What’s happening with Birkenstock’s IPO?
Iconic brand Birkenstock is ready for its market debut. The German sandal maker is backed by private equity firm L Catterton, which targets a fully diluted valuation of around $10 billion. Birkenstock plans to sell at least 32 million shares priced between $44 and $49 each.
According to an SEC filing on Monday, Birkenstock will raise $1.58 billion at the top end as proceeds.
The footwear brand also announced that Alexandre Arnault, son of the billionaire LVMH chairman Bernard Arnault, will join its board. It makes sense, given that Financière Agache, controlled by the Arnault family that owns LVMH, apparently has plans to invest $325 million in the Birkenstock IPO.
Besides, Birkenstocks can arguably be considered luxury goods these days. The company reported a 21% revenue increase in the nine-month period ending June 30, showing that Birkenstock has maintained power despite the economic downturn.
How have the other IPOs fared?
The Birkenstock debut is in the lucky position of having had some other companies test the waters with their IPOs first. The biggest was semiconductor chip designer Arm, which climbed 25% over its $51 price for its IPO. Grocery shopping app Instacart raised $9 billion after pricing its debut at $30 a share.
But the reality is that the IPO market is still very slow. KPMG says market debuts have raised $18 billion so far this year, compared to 2022’s $23 billion. Both are mere shadows of 2021’s boom year, which saw over $300 billion worth of market debuts.
It’s also worth noting both of those market debuts have since dropped back to roughly what they were originally priced: Arm is trading for $51.67, and Instacart has dropped 20% to $26.87. The reality? These companies were part of the hype after Wall Street got excited about having deals on the table again. Birkenstock may suffer the same fate.
The bottom line
The Birkenstock IPO comes at a time when market debuts have started off as blockbusters, then quickly fizzled out. It’s a sign that the market isn’t quite ready for IPOs in a high inflation and higher interest rates environment. At least Birkenstock has luxury fashion house LMVH’s backing, whose pockets run deep.
