Temple & Webster to acquire Milan Direct and list on the ASX next month in a $60 million IPO
Friday, November 13, 2015/
Homegrown online retailer Temple & Webster intends to list on the Australian Securities Exchange next month via an initial public offering that will attempt to raise more than $60 million.
The online retailer, which was ranked 28th on this year’s Smart50, will also buy online furniture business Milan Direct for around $20 million in the lead-up to the IPO.
The announcement is the latest in a string of acquisitions that form part of Temple & Webster’s aggressive growth strategy.
In August, Temple & Webster snapped up the Australian arm of US furnishings and decor business Wayfair for an undisclosed amount. It has since rebranded the offshoot as ZIZO.
Brian Shanahan, co-founder and chief executive of Temple & Webster, told SmartCompany it’s been a very busy year for the business.
“It’s certainly finishing on a high,” Shanahan says.
“As part of the fundraising, we’ll be acquiring Milan Direct… a business that has been around for nearly a decade and has been a number one furniture retailer in Australia. We want to continue to invest in growing brand awareness so we can become the long term leader.”
Temple & Webster will issue 55.9 million shares in the IPO at a price of $1.10. The listing is expected to give the retailer a market capitalisation of $116.3 million.
The business recorded revenue of $26.1 million for the 2014-15 financial year but is yet to turn a profit, according to the listing prospectus.
Temple & Webster recorded a $11 million loss last financial year but Shanahan hopes to narrow that figure to $9.5 million by the end of the current financial year.
The co-founder says achieving a long-term leadership position in the online retail space is “more important right now” than short-term profitability.
“Online spending in the category in Australia today is only 3% for online,” Shanahan says.
“There’s going to be a natural migration of spending from offline channels to online channels and we want to position ourselves to capture that change in the consumer as they go forward. To do that, we need to ensure we’ve got great brand awareness and a fantastic customer experience and invest now to win the market.”
“I’d rather be two years too early [in listing] than two years too late.”
As for his advice for how to grow fast without the wheels coming off, Shanahan says “it’s all about the people”.
“You need to surround yourself with great people,” he says.
“The people include your brokers and advisers and, of course, you need fantastic people in the business itself. If you’ve got great people working with you then you’ve got a great chance of success.”