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Shares in Birkenstock dropped more than 10 per cent on their first day of trading on Wednesday afternoon, after the German sandal maker completed the third-largest US listing of the year.
The market for initial public offerings has been gathering steam recently after a prolonged slowdown, but Birkenstock’s tepid debut provides a further reminder that investors remain cautious compared to the exuberance of 2020 and 2021.
Arm, Instacart and Klaviyo all priced large IPOs at or above the top of their target ranges last month, but trading in the newly listed groups has been choppy in the weeks since.
Birkenstock closed at $40.20 a share, almost 13 per cent below the initial offering price of $46 agreed on Tuesday evening. The offer price was around the middle of its previous target range.
Wednesday’s closing price gives Birkenstock, which describes itself as a “revered universal consumer zeitgeist brand”, a market capitalisation of $7.6bn based on shares outstanding or $8.2bn on a fully diluted basis.
Oliver Reichert, Birkenstock chief executive, said: “With our heritage dating back to 1774 we are a company focused on long-term sustainable growth and this is reflected in our shareholder base.”
The deal raised almost $1.5bn for the company and L Catterton, its private equity owner. About a third of the proceeds will be used by the company to repay debt, with the rest going to L Catterton.
The listing came less than three years after L Catterton, which is backed by French luxury fashion house LVMH, bought a majority stake in a deal that valued Birkenstock at about €4bn.
Financière Agache, the family holding company of LVMH chief executive Bernard Arnault, agreed to buy up to $325mn Birkenstock shares as part of the IPO, and Arnault’s son Alexandre will join Birkenstock’s board of directors after the deal completes.
Norway’s sovereign wealth fund and investment group Durable Capital Partners also agreed to act as cornerstone investors, buying up to $300mn in shares between them.
Birkenstock reported revenue of €1.1bn in the nine months to the end of June, up 21 per cent year on year. However, net profits dropped 20 per cent to €103mn.
LVMH’s disappointing earnings report earlier on Wednesday sparked concerns among some analysts that a post-pandemic boom in the luxury sector was coming to an end. Shares in the French group dropped almost 7 per cent after it reported slowing sales growth in the third quarter.
It was the second of L Catterton’s portfolio companies to list 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 tentative rebound in listings in recent months, but investors and bankers have cautioned that they do not expect a full return to normal volumes until early 2024 at the earliest.