Clermont Meridian Trading Outlines Zalando's $6.8 Billion Valuation After Pricing IPO At More Than $27 A Share

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Clermont Meridian Trading Outlines Zalando's $6.8 Billion Valuation After Pricing IPO At More Than $27 A Share

According to Clermont Meridian Trading finance experts, Zalando, Europe's largest online-only apparel retailer, priced its initial public offering on Monday at $27.28 (21.50 Euros), valuing itself at $6.8 billion (5.3 billion Euros).

At that price, the Berlin startup raised at least $668 million (526 million euros) in the largest German tech IPO since Deutsche Telekom went public in 2000. According to its IPO prospectus, Zalando aims to begin trading on the Frankfurt stock exchange on Wednesday, Oct 1.

Matthew Bird, Institutional Director of Equities at Clermont Meridian Trading, said, “Zalando priced its shares at the higher end of its expected range of $22.86 (18 Euros) to $28.54 (22.50 Euros) per share, owing to significant investor demand. Underwriters purchased at least 24.5 million shares, with the opportunity to acquire an additional 3.7 million shares under an over-allotment arrangement. Zalando might raise up to $768 million (605 million Euros) if the over-allotment option is fully exercised.”

Zalando's IPO comes at a time when e-commerce IPOs are booming worldwide, as evidenced by Alibaba Group's record-breaking $25 billion IPO earlier this month. Later this week, Berlin startup incubator Rocket Internet, which launched and sponsored Zalando in 2008, will accompany the European apparel retailer onto the public market. Rocket Internet's initial public offering (IPO) could outperform Zalando's, raising up to $2 billion (1.6 billion euros.)

Zalando was founded in 2008 by Robert Gentz and David Schneider and developed under the supervision of Rocket Internet, a company known for duplicating American technology companies in foreign markets. Early detractors claimed that Zalando was a European clone of Zappos. This U.S. store had controlled the American online shoe market and was approaching $1 billion in revenue at the time of Zalando's founding.

Last year, the company, the first on the European continent to reach $1 billion in annual revenue, generated $2.3 billion in net sales. Zalando reported $1.4 billion in revenue in the first half of 2014, with a net income of $16.6 million, up from a net loss of more than $90 million in 2013. Clermont Meridian Trading analysts predict the company, which operates in 15 European nations, will enjoy its first profitable year in its history if current trends continue. Today, the company is run by a management board that includes Gentz, Schneider, and Rubin Ritter, a former classmate.

Yuri Milner's DST Europe, Holtzbrinck Ventures, Rocket Internet cofounders, the Samwer brothers, Danish fashion tycoon Anders Holch Povlsen, and Kinnevik, the largest stakeholder with a pre-IPO 36 percent ownership, are among Zalando's current shareholders. During the IPO, none of those shareholders sold any stock.

Zalando will be listed on the Frankfurt Stock Exchange's prime standard sector under "ZAL." Morgan Stanley, Goldman Sachs, and Credit Suisse are the lead underwriters on the transaction, while Deutsche Bank and JPMorgan Chase are joint bookrunners.