Lisa Ho withdraws share float plans to explore private options

Fashion brand Lisa Ho has abandoned its plans to pursue listing on the Australian stock exchange after receiving interest from private equity investors.

The upmarket women’s fashion label was due to be listed on the stock exchange today, but Lisa Ho Design director Ann Bowering told The Australian after its prospectus was released, the brand received interest from private equity investors.

“We received several leads from private equity, who indicated a preference for a privately structured transaction. We have therefore withdrawn the IPO to pursue these leads,” Bowering was quoted as saying.

SmartCompany contacted Lisa Ho Design, but no comment was received prior to publication.

Chief executive of the Retail Doctor Group, Brian Walker, told SmartCompany privately structured transactions tend to be a shorter-term option in contrast to an IPO.

“With a private equity model, investors usually get in and buy a controlling share, but get out pretty quickly,” he says. “If you can raise the float, an IPO is typically a longer term, more stable option,” he says.

Bowering said the company was considering its fund raising options before deciding what would be the most suitable form of capital-raising for the brand.

The Lisa Ho brand was created in 1982 and has since grown to have 10 flagship stores in Australia, along with two clearance stores and an online store.

In February, Lisa Ho Group filed a prospectus with the Australian Securities and Exchange Commission for the offer of 7.5 million shares priced at $0.20 per share to raise a minimum of $1.5 million.

The prospectus detailed plans to become an “international icon”, saying the money would have been spent on refurbishing up to 11 David Jones concessions stores, replenishing working capital, increasing global promotions and improving and expanding its online sales.

Despite the plans for international expansion, Bowering told The Australian funds raised through private equity would initially be used to “pay down debt and expand locally”.

The prospectus details the company’s financials, stating it recorded sales revenue of $15.5 million in 2010, $14.7 million in 2011 and $13.05 million in 2012.

The business also recorded a profit after tax of $276,000 in 2010, $320,000 in 2011, but recorded a loss of $2.3 million in 2012, which the business attributed to one-off issues.

Brian Walker says typically retailers tend to favour a private equity model.

“They look for the ability the business could be replicable, if it has a unique position in the market place and a good brand name.”

“Typically, they’ve got a lot of fat to cut out of the business and can see a quick improvement in operating returns once changes are made.”

“Equity firms also look for if they can grow scale in the business and see an exit strategy with little fuss,” he says.

 

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