European online furniture retailer Westwing plans to raise about 120 million euros ($139 million) in a Frankfurt listing, the latest start-up backed by German investor Rocket Internet (RKET.DE) to go public.
Delivery Hero (DHER.DE) and HelloFresh (HFGG.DE) floated last year and larger furniture site Home24 (H24.DE) in June, helping to change views on Rocket, which had a shaky start after listing in 2014 but has seen its share price rise by more than a third this year.
The biggest remaining Rocket businesses yet to go public are Global Fashion Group, which sells clothes and shoes in emerging markets, and African ecommerce group Jumia.
The furniture and homewares sector has been much slower to move online than the fashion industry, but big players like IKEA [IKEA.UL] are now investing heavily in ecommerce, with German online sales of furniture up 12 percent in 2017.
Westwing says the European market for homewares is worth 117 billion euros and is at a tipping point towards ecommerce, which currently has a share below 5 percent in its 11 markets, compared to about 14 percent in Britain and the United States.
Westwing said on Thursday it plans to sell newly issued shares from a capital increase and use the IPO proceeds to invest in technology and marketing as well as to repay debt.
The Munich-based company offers shoppers who sign up for its online shopping club, furniture and home accessories at deep discounts in daily flash sales, driving its loyal customers – mostly women – to check the site about 100 times a year.
That means that its marketing spending – at about 6 percent of sales in 2017 – is significantly below most ecommerce sites, Chief Executive Stefan Smalla told a conference call.
SALES RISE FORECAST
Last year, Westwing posted a loss before interest, tax, depreciation and amortization (EBITDA) of 4.9 million euros on revenues of 266 million.
It moved into the black in the final quarter of 2017 and notched up sales of 120 million euros in the first half of this year with an adjusted EBITDA margin of 2 percent.
The company expects an EBITDA margin of 1-2 percent for the full year and sales to rise 15-20 percent, Smalla said.
Rocket holds 32 percent of Westwing, with other investors including Investment AB Kinnevik (KINVb.ST), Access Industries, Summit Partners, Tengelmann Ventures, Fidelity Worldwide Investment and Odey.
In a 2016 round of fundraising Westwing – which was founded in 2011 – was valued at 449 million euros.
Berenberg and Citigroup are acting as joint global coordinators and joint bookrunners.