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Authentic Brands Postpones IPO In Favor of Private Stake Sale

Authentic Brands Group, which owns apparel chains Forever 21 and Aeropostale as well as Barneys New York, is postponing its IPO in favor of selling equity privately.

Authentic Brands Group, the retail conglomerate that owns apparel chains Forever 21 and Aeropostale as well as Barneys New York, is shelving a planned initial public offering and instead selling equity stakes in its business to private equity firm CVC Capital, hedge fund HPS Investment Partners and a pool of existing stakeholders.

The stake-sale, reported on Monday by CNBC, gives the company an enterprise value of approximately $12.7 billion. Authentic Brands had been looking at about a $10 billion valuation in its public debut, which it originally filed for back in early July.

Authentic Brands’ portfolio companies also include Brooks Brothers, which went into bankruptcy protection at the start of the pandemic, as well as Sports Illustrated magazine. The Arena Group, formerly Maven  (MVEN) , is publisher of Sports Illustrated and the parent company of TheStreet.com.

Early next year, its deal to buy shoe and athletic gear maker Reebok from Germany’s Adidas  (ADDYY)  is expected to close, adding another brand to its holdings.

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The move is a pivot from the recent flow of IPOs from other retailers that have looked to cash in on the post-pandemic market rebound as well as the rebound in consumer spending, which has helped drive retail sales both online and in person

Eyeglasses maker Warby Parker   (WRBY) - Get Warby Parker Report and fashion rental platform Rent the Runway  (RENT)  went public in September and October, respectively, while eco-friendly shoe brand Allbirds  (BIRD) - Get Allbirds Report went public earlier this month.

Authentic Brands CEO Jamie Salter told CNBC in an interview that the company will now target an IPO date in 2023 or 2024. He said he has signed on to be CEO for another five years.

“The IPO climate is ridiculous,” Salter told CNBC. “I think we would have gotten a massive valuation ... maybe even more than what we sold the business for. But guess what? I’d rather be private.”

The transaction with CVC and HPS is expected to close this December, at which point the PE firm and hedge fund will each retain a seat on Authentic Brands’ board of directors.