Mytheresa, the German online luxury retailer, was valued at $2.2bn in its initial public offering in New York on Wednesday, capping an extraordinary leap in its valuation over the past two years and validating hedge funds that fought vicious legal battles for a piece of the company.
The Munich-based group, which was once part of bankrupt US retailer Neiman Marcus, said it had priced its shares at $26 apiece, the top of its targeted range.
Mytheresa sells over 200 luxury brands including Burberry and Prada and boasted more than half a million active customers at the end of September. It shipped over 1m orders to 133 countries in its past fiscal year, according to its IPO prospectus, with net sales of €450m, an 18.6 per cent increase on the previous year.
At its offer price, Mytheresa’s market capitalisation of $2.2bn represents a leap from valuation estimates in recent years and a big win for private equity group Ares Management, Mytheresa’s principal shareholder. Neiman Marcus, the department store chain owned by Ares and Canadian pension plan CPPIB, acquired Mytheresa for just $200m in 2014.
The online retailer became a bone of contention in a complex debt restructuring executed by Neiman in 2019 as its core department store business faltered, and then again after its bankruptcy.
Ares had controversially transferred Mytheresa out of the reach of Neiman’s creditors in 2018, but as a part of the restructuring settlement returned portions of the company to hedge funds and other creditor groups in the form of preferred and common stock.
Ares and CPPIB last year agreed to hand over a further $172m of their Mytheresa interests to unsecured creditors after one hedge fund holdout, Marble Ridge Capital, persuaded the bankruptcy court to allow an investigation into the original transfer deal. The Neiman owners did not admit to any wrongdoing.
Marble Ridge has since been wound down after its founder Daniel Kamensky was charged with fraud, extortion and obstruction of justice over his dealings regarding Neiman Marcus.
When an expert witness for creditors last year valued Mytheresa at $925m, Ares and CPPIB told the bankruptcy court that figure was “astronomically high” and had “no resemblance to reality”. In 2019, Neiman bankers had received bids for Mytheresa that had not exceeded $500m.
The bumper IPO therefore provided Mytheresa’s owners with a significant payday. Together they are selling 2m of their shares, worth $52m.
The stock will make its trading debut on the New York Stock Exchange on Thursday.
The listing comes after an upbeat start to the year for IPOs. It also signals continued investor appetite for consumer-facing companies with a technology edge. Last week, shares in online lender Affirm and ecommerce platform Poshmark priced above initial expectations and then doubled on their market debut.
Mytheresa will continue to be led by chief executive Michael Kliger and will keep its incorporation in the Netherlands for tax reasons. Its prospectus lists as a risk factor having to file its taxes in other jurisdictions, such as the US.
The company, which operates only two physical stores in Munich, said 53 per cent of gross merchandise sales were generated on mobile devices in the 2020 fiscal year.
It touted its children’s and men’s units, launched at the beginning of 2019 and 2020, respectively, as potential growth engines.