Brett Blundy to float Adairs in $200 million IPO

Rich Lister Brett Blundy could pull off his second successful initial public offering in six months, with reports manchester and homewares retailer Adairs is on the home stretch for a $224 million float next month.

A float of the almost century-old retailer would follow in the footsteps of a successful listing of jewellery chain Lovisa in mid-December, which raised $110 million and gave the company a market capitalisation of $210 million.

Fairfax reports pricing for the Adairs float released to fund managers last week put shares in the retailer at between $2.20 and $2.48, which represents a 15-16.8 multiple on the company’s 2016 financial year profit forecast.

That price range would raise between $201 million and $224 million and give Adairs a market capitalisation of between $406 million and $450 million.

Blundy’s BB Retail Capital and Catalyst Investment Managers are expected to retain half of their shareholdings in the float, the final price for which will be decided at an institutional bookbuild at the end of this week. If successful, Adairs will list on the Australian Securities Exchange on June 17.

According to Fairfax, BB Retail plans to hold on to 9-9.1% of Adairs following the float, while Catalyst, which invested in the company in 2010, will retain between 31.5 and 31.8%.

Adairs traces its history back to 1918, with the retailer’s first store opening on Chapel Street in the Melbourne suburb of Prahran. Adairs later become a mini department store in nearby Camberwell, which sold manchester, curtains, women’s clothing and haberdashery until 1980.

Adairs in its incarnation was born in 1981, with a boutique in Doncaster Shoppingtown centre. This was followed by four other stores in Victoria, which opened in 1984. There are now more than 100 Adairs stores operating across the country and the retailer employs more than 1000 people.

BB Retail Capital purchased a majority stake in Adairs from the MacLean family in November 2007. The company was acquired by Catalyst, together with the company’s management team and BB Retail Capital, in December 2010.

Brian Walker, chief executive of the Retail Doctor Group, told SmartCompany without information about Adairs’ current level of debt and equity, it appears the retailer is seeking to raise funds to invest in future growth.

While Walker says there would be some opportunities for Adairs to expand its store footprint in South Australia and Western Australia, given its dominance on the east coast, he believes Adairs would also be considering options to expand offshore.

“They are also pushing online,” Walker says, adding the retailer has if anything recently “trimmed” its number of bricks-and-mortar stores.

Like other longstanding brands, Walker says Adairs faces a constant challenge between drawing on its heritage and presenting a contemporary image.

“It’s not something they overtly advertise,” Walker says of the company’s history.

“But when I think of Adairs, I think of Angus & Coote, that’s another 100-year-old retail brand.”

SmartCompany contacted Adairs and BB Retail Capital but did not receive a response prior to publication.