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German sandal maker Birkenstock completed its third-largest U.S. listing of the year on Wednesday afternoon, sending its shares down more than 10% in its first day of trading Wednesday afternoon.
The initial public offering market has been heating up recently after a long slowdown, but Birkenstock’s debut is a further reminder that investors remain cautious compared with the boom of 2020 and 2021.
Last month’s big IPOs from Arm, Instacart and Klaviyo all priced at or above the high end of their target ranges, but trading for the newly listed group has been volatile in the weeks since.
Birkenstock opened at $41 a share, 11% below the $46 initial offering price agreed late Tuesday. The quote is around the middle of the previous target range. Based on the opening price, Birkenstock’s outstanding stock market value was US$7.7 billion, and its fully diluted market value was US$8.3 billion.
The deal raised nearly $1.5 billion for the company and its private equity owner L Catterton. About a third of the proceeds will be used by the company to pay down debt, with the remainder donated to L Catterton.
The listing comes less than three years after L Catterton, backed by French luxury fashion brand LVMH, acquired a majority stake in Birkenstock in a deal that valued Birkenstock at about 4 billion euros.
Financière Agache, the family holding company of LVMH CEO Bernard Arnault, agreed to purchase up to $325 million in Birkenstock shares as part of the IPO. After the transaction is completed, Arnault’s son Alexandre will join the Birkenstock board of directors.
Norway’s sovereign wealth fund and investment group Durable Capital Partners also agreed to serve as cornerstone investors, co-purchasing up to $300 million in shares.
Birkenstock, which dates back to 1774, had revenue of 1.1 billion euros ($1.2 billion) in the nine months to the end of June, a 21% annual increase. However, net profit fell 20% to 103 million euros.
Disappointing earnings from LVMH Moët Hennessy Louis Vuitton earlier on Wednesday stoked concerns among some analysts that the luxury industry’s post-pandemic boom was coming to an end. Shares of the French group fell nearly 7% after reporting slower sales growth in the third quarter.
This is the second listing of L Catterton’s portfolio company in the past few months, following online beauty retailer Oddity Tech’s listing on the Nasdaq exchange in July.
Falling volatility and rising share prices have encouraged a temporary rebound in listings in recent months, but investors and bankers have warned they don’t expect a full return to normal trading volumes until early 2024 at the earliest.
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