Birkenstock aims for $10 billion valuation as it strides toward Wall Street

© Reuters. FILE PHOTO: A pair of shoes is pictured in a window of a Birkenstock footwear store in Berlin, Germany, January 21, 2021. REUTERS/Fabrizio Bensch/File Photo

By Manya Saini and Niket Nishant

(Reuters) -Birkenstock, the German premium footwear brand backed by private-equity firm L Catterton, has targeted a fully diluted valuation of about $10 billion in its highly anticipated U.S. initial public offering (IPO).

The company and its stockholder plan to sell at least 32 million shares, likely to be priced between $44 and $49 apiece, and raise about $1.58 billion at the top end, as per a filing with the U.S. Securities and Exchange Commission on Monday.

Birkenstock is pushing ahead with its plans when a revival in IPO activity after a two-year drought faces mixed post-debut performances by some of the high-profile listings including Arm and Instacart (NASDAQ:CART).

"Investor sentiment is still highly sensitive, particularly given the realization that high interest rates are set to linger," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

"So, despite the heady ambitions, Birkenstock may still end up listing at a mid or lower price in the range, regardless of all the publicity."

Meanwhile, a last-ditch attempt to avert a government shutdown should keep the U.S. securities regulator well-staffed to review more filings and help buoy the IPO market.

Birkenstock, which will list its shares on the New York Stock Exchange under the ticker symbol 'BIRK', also revealed the nomination of Alexandre Arnault, the son of billionaire LVMH Chairman Bernard Arnault, to its board.

Financière Agache, controlled by the Arnault family that owns LVMH, has indicated an interest to buy $325 million of ordinary shares in the offering, Birkenstock said.

One or more funds managed by Durable Capital Partners LP and Norges Bank Investment Management have separately indicated an interest in buying shares combined worth $300 million.

BARBIE WORLD

Birkenstock's trademark typically has been comfort rather than fashion. But it has found favor among fashion aficionados, reportedly more so after one of its brands was featured in "Barbie" where the movie's lead actress, Margot Robbie, was seen donning a pair of pink Birkenstock.

"Fashionistas can be fickle and while Birkenstock may be basking in rays of popularity right now, it's going to have to run fast to keep up in the stylish stakes. Counterfeit goods could also cause the company to lose its footing in the fast-moving fashion environment," Streeter said.

Last month, Birkenstock said its revenue jumped 21% in the nine-month period ended June 30, showing strength against a difficult demand environment for luxury goods as inflation-weary consumers temper their spending.

Birkenstock, which traces its roots back to 1774, is a sixth-generation family-owned business. It has partnered with several high-profile brands including Dior, Manolo Blahnik and Rick Owens.

L Catterton will own a roughly 83% stake in the company after the offering. Birkenstock intends to use the proceeds of the IPO to pay down debt, the filing showed.

Goldman Sachs, J.P. Morgan and Morgan Stanley are among the underwriters for the IPO.