How Permira killed the Golden Goose IPO

Bankers were adamant Golden Goose, the maker of the €500 distressed-look trainers favoured by Taylor Swift, was ready to become a public company.

After more than 10 months of preparation, the Italian footwear brand was seeking to raise about €600mn in a Milan listing as early as Friday. It had reported strong first-quarter sales. No less than seven banks had been building its IPO book, which was by Tuesday oversubscribed. Fund manager Invesco had agreed to be a cornerstone investor.

But Francesco Pascalizi, the dealmaker in charge of the investment at private equity owner Permira, suddenly got cold feet.

Permira’s decision to pull the highly anticipated listing late on Tuesday shocked advisers and investors that had committed to the fundraising. It dealt a blow to the tentative recovery of Europe’s IPO market, and more companies that had been planning a listing this year may now err on the side of caution and put off their plans in the wake of the aborted flotation.

The last-minute collapse also underscores the nervousness of Permira in the wake of a series of underperforming listings, including that of Dr Martens in 2021. The bootmaker has since issued five profit warnings and its shares have plunged 80 per cent.

Talks that led to the decision were fractious, according to multiple people directly involved in the listing preparations. The divergence of views between advisers and their private equity client sparked “long and heated discussions”, according to one insider.

“With all due respect what the fuck are you talking about,” one adviser lashed out during a call on Tuesday, according to other people on the line. 

“It looks bad to pull out two days before the debut, but it looks much worse if the stock plunges 20 per cent in the first week of trading,” a banker remarked on Wednesday.

“Permira can’t afford another embarrassment after Dr Martens,” said another.

Executives at the €80bn London-based buyout group started worrying last week, according to people close to the talks. Shares in LVMH and puffer jacket maker Moncler tanked following French President Emmanuel Macron’s surprise decision to call snap parliamentary elections, raising the prospect of a far-right government leading Eurozone’s second-largest economy.

As investors reduced their exposure to European stocks, “big names that had committed dozens of millions” to the Golden Goose IPO scrapped their orders, said one person close to the talks.

It did not help that important investors such as BlackRock and GIC had stayed away, according to people with knowledge of the bookbuilding. Permira feared a sell-off in the after-market, people close to the buyout group said.

Bookrunners, however, pushed back until the end: the investor mix was strong enough to go ahead, they argued. To be sure, the IPO would price near the bottom of the range at €9.75 per share, valuing the company at less than €2bn — much lower than the €3bn that had previously been speculated.

But the book was roughly four times subscribed at that price. And the company’s top management, led by Silvio Campara, believed the valuation was “fair”, as did Permira, according to three people.

The private equity group bought Golden Goose, which is headquartered near Venice, just before the pandemic led to global lockdowns, with Italy among the most severely affected countries.

While the global luxury sector has been facing a slowdown this year, Golden Goose reported a 12 per cent rise in revenue in the first quarter.

“Dr Martens was by far a lower price point and is more an upper mass-market product, [while[ Golden Goose is more accessible luxury and is able to build up its story,” said Mario Ortelli, an adviser focused on luxury.

However, Permira’s record was a sensitive issue, market participants say. French cyber security company Exclusive Networks, which it listed in 2021 at €20 per share, is now trading at just €19. TeamViewer and Allegro, which the firm took public in 2019 and 2020, respectively, both trade below their IPO prices.

Permira sold the last of its stake in Hugo Boss in March 2015, shortly before a sharp drop in its share price, which is now more than 60 per cent below its level when the buyout group exited.

Permira had initially sought to bring large institutional Asian investors on board but failed, according to three people familiar with the talks. Singapore’s GIC, for example, had been approached to be an investor in the deal but decided against it. GIC declined to comment. Another opt-out was BlackRock, said the people. BlackRock could not immediately be reached for comment.

“The risk of this turning into a mediocre IPO was higher than the advantage of going ahead,” said one participant.

Permira may attempt to revive the listing in the next few weeks, some advisers said. But its decision not to go ahead may have taken the momentum out of the whole IPO market in Europe. Other listing candidates are also thinking twice about their plans, including Tendam, a private equity-owned Spanish retailer. Tendam declined to comment.

Campara, however, said he was hopeful the IPO preparations would not go to waste.

“Golden Goose is a great story of love and our priority has always been to tell this story to the right community of investors,” he told the Financial Times after the decision to postpone the company’s listing. The roadshow made investors “perceive Golden Goose not only as a strong and profitable business, but as a true Next Gen global luxury company.”