Global Fashion Group, the emerging markets-focused online fashion retailer, is planning to go public as early as next month, in an effort to raise fresh funds for its fast-growing operations in countries such as Russia, Brazil and Indonesia.
The initial public offering is expected to raise about €300m, GFG said. The group will be listed on Frankfurt's Prime Standard market.
GFG is majority-owned by Kinnevik of Sweden, which holds about 35 per cent, and German tech incubator Rocket Internet, which has a stake of about 21 per cent. The company's business model is similar to that of Zalando, the European e-commerce group, which enjoyed early support from the Swedish and German investors. Zalando listed its shares on the Frankfurt Stock Exchange in 2014 and has a market capitalisation of about €8.8bn.
Founded eight years ago, GFG is run by two German co-chief executives, Christoph Barchewitz and Patrick Schmidt.
"We have built a great set of consumer brands," Mr Schmidt said in an interview. "We have more than 11m active consumers and did €1.5bn in sales last year. We are already profitable in half our markets. In terms of our development, scale and finances, we are now at a stage where we can become a successful public company."
According to the latest set of full-year results, GFG increased net merchandise value — a measure of sales — by 23 per cent to €1.45bn over the course of 2018. The group reported an adjusted loss before interest, tax, depreciation and amortisation last year of €49.8m, down from €98m the year before.
GFG was set up with a focus on markets ignored by established online fashion retailers from the US, Europe and China. It runs four e-commerce platforms that are market leaders in their respective regions: The Iconic, in Australia and New Zealand; Zalora in Asian countries such as Indonesia, Malaysia and the Philippines; Dafiti in Latin America; and La Moda in Russia and former states of the Soviet Union.
According to GFG, the four platforms give the group exposure to more than 1bn potential customers, in regions where online sales are still relatively low. GFG calculates that online fashion sales account for 6 per cent in the markets it operates in, compared with 15 per cent in the EU, 20 per cent in the US, and 39 per cent in China.
The comparatively low number reflects at least in part logistics problems, especially in countries as large and disparate as Indonesia, Brazil and Russia. This has forced GFG to play a much more active role in the delivery of its goods, including on the "last mile" to customers' homes. E-commerce businesses in western Europe and the US typically leave the business of delivery to external companies.
"Our markets are about 10 years behind the US and Europe," said Mr Barchewitz. The planned IPO, he argued, would allow GFG to cement its position in regions that offered significant growth potential.
"The reason why we are pursuing fundraising is that we have a great investment opportunity . . . We are not seeking to create an opportunity for our existing shareholders to sell down," he added. "We are really looking to raise more capital to keep building the next [logistics] centre, create the next innovation on the technology side, pursue market opportunities and launch the next category."
In most markets where GFG is active, bricks-and-mortar retailers are the most significant competitor, the co-chief executive said.
Goldman Sachs, Morgan Stanley, Berenberg and HSBC are advising on the IPO.
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