The initial-public-offering market is gearing up for the arrival of the Birkenstock deal, with the iconic German sandal maker expected to price its stock later Tuesday for a Wednesday debut.
For now, the IPO is the only one expected this week — although some smaller issuers may opt to join the calendar late, according to Renaissance Capital, a provider of IPO exchange-traded funds and institutional research.
Birkenstock is planning to offer 32.3 million shares priced at $44 to $49 each. The company would raise $1.58 billion at the top of that range at a valuation of $9.2 billion.
The company has applied to be listed on the New York Stock Exchange under the ticker symbol “BIRK.” Goldman Sachs, JPMorgan and Morgan Stanley are the lead underwriters in a team of 22 banks working on the deal. Underwriters have the option to purchase up to 4.8 million more shares from the selling shareholders to cover overallotments.
Read more: Birkenstock is going public: 5 things to know about the iconic German sandal maker’s IPO designs
“Birkenstock is pitching a combination of profitability and growth, along with widespread brand recognition,” said Renaissance Capital Founder and CEO Bill Smith. “Despite its robust fundamentals, the company is coming public against a backdrop of weak aftermarket trading from recent large IPOs.”
Even before the current hostilities in Israel broke out, the market had seen three key deals lose some of their luster in the days immediately following their debuts.
Context: Investment strategist Tom Lee sees Israel attack leading to ‘risk off’ market environment, where yields retreat and stocks rise
Chip maker Arm Holdings Ltd.
ARM,
; Klaviyo
KVYO,
a digital marketing company; and Instacart, which trades as Maplebear Inc.
CART,
; all enjoyed strong gains on their first day of trade but pared those in the following sessions. Instacart was quoted at $24.10 on Monday, well below its issue price of $30.
Related: Instacart shares slump to their IPO price as investors have second thoughts
Not everyone is enamored of Birkenstock, despite its 250-year history and the fact that it’s profitable. David Trainer, chief executive of independent equity research company New Constructs, said last week the valuation is too high and that investors may lose money on the deal.
Read now: Birkenstock’s valuation is too high and investors may not make money in its IPO, analyst says
A small, pre-revenue company called Gamer Pakistan Inc.
GPAK,
meanwhile, was down 29% in its first day of trade on Monday.
That company priced its IPO last week at $4 a share, the low end of a $4-to-$5 range, but was unable to trade as it sorted out issues with Nasdaq. The company is the first from Pakistan to list on a U.S. exchange.
The company raised $6.8 million in its initial public offering by selling 1.7 million shares. With 25.6 million shares outstanding, the company had a valuation of $102.4 million at the IPO price. The stock is trading on Nasdaq under the ticker symbol “GPAK.”
“We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021,” the company said in its filing documents with the Securities and Exchange Commission.
Auditor Mercurius & Associates LLP says the company’s pre-revenue deficit “raises substantial doubt about the company’s ability to continue as a going concern.” That language is not atypical in IPO filings by companies that are pre-revenue, such as pre-clinical biotechnology companies.
The Renaissance IPO ETF
IPO
has gained 28% to date in 2023, while the S&P 500
SPX
has gained 13%.
Read next: Esports company Gamer Pakistan stock becomes the first entity from that country to list on a U.S. exchange
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