Fashion Flotation

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At German Online Retailer Zalando, a Record IPO Takes Shape

A Zalando logistics center in Germany. Source: Zalando
A Zalando logistics center in Germany.
  • Why it matters

    Why it matters

    Zalando’s IPO performance is the first big test of Berlin’s start up scene. If it succeeds, it could pave the way for other online retailers to go public.

  • Facts

    Facts

    • Zalando is Europe’s largest shoe and fashion online retailer.
    • Zalando is an investment by Rocket Internet, a Berlin start-up incubator planning its own IPO.
    • Zalando wants to sell shares before the Chinese Internet online giant Alibaba launches its own IPO.
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    Audio

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German online fashion retailer Zalando on Wednesday announced plans to raise hundreds of millions of euros in Europe’s largest initial public offering since the collapse of the dot.com bubble nearly 15 years ago, in a test of the financial viability of Berlin’s start-up scene.

Analysts suggest that a successful launch could herald a new era of IPOs by online companies. The size of the IPO was clouded in speculation and the company, based in Berlin, declined to comment other than to say that the money raised would equate to 10 to 11 percent of its total market value.

According to people informed of the company’s plans who spoke with Handelsblatt, Zalando plans to raise up to €750 million ($985 million), which if correct would value the company at more than €7 billion. A frequently used estimate of the market value of Zalando, a retailer that has grown quickly by giving its customers free postal exchanges on all of its merchandise, was €4 billion.

Regardless of the ultimate size of the deal, analysts said it could set a precedent, ushering in a new era of IPOs in Germany after the collapse of the dot.com economy in 2000.

“If the Zalando IPO is going to be a success, it will be an indicator to other online retailers and tech companies to go public as well,” Bjorn Gustafsson, an analyst at Kepler Cheuvreux, said.

Zalando, which sells shoes, clothes and accessories, was founded in 2008 by David Schneider and Robert Gentz. It was backed by three German brothers — Oliver, Marc and Alexander Samwer — who founded an Internet start-up incubator called Rocket Internet. Both companies are based in Berlin and have been viewed as the symbols of the German capital’s growing e-commerce scene.

There has been speculation that Rocket Internet is itself preparing for an IPO, but the company and its founders have declined to comment publicly. If that is true, the success of Zalando’s IPO will be a significant test of whether Rocket Internet will follow with its own flotation.

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