Benko company Signa Sports United goes public

Signa Sports United wants to use the stock exchange listing to consolidate the market, which is considered to be very fragmented, especially in the USA. According to financial circles, the company wants to use authorized share capital in the amount of four to five times its own market capitalization and pay for deals with its own shares. In the USA, unlike in Germany, such large reserve resolutions are common and make it possible to finance an aggressive growth strategy with the issue of new shares.

At the end of the deal, Signa Sports boss Stephan Zoll said: “This important step enables us to build on the strengths of our technology and infrastructure platform and to further expand our position in the global sports e-commerce market.”

In a so-called spac deal, an empty company shell without its own business – called a “special purpose acquisition company” – goes public and then merges with an unlisted company, which is then quickly given a listing.

Spac hype has died down

In the first half of 2021 there was a real Spac hype, globally this year 594 such vehicles went public, most of which are still looking for takeover targets. However, investor demand has fallen sharply since the summer. On the one hand, the number of new Spacs has collapsed. On the other hand, the stock exchange jackets have found it increasingly difficult to find enough investors for the standard capital increase in the run-up to the merger with the target company.

Investors also exercised their right of rescission on a large scale, so that in many cases only ten to 20 percent of the funds that had flowed when the Spac was issued were available in the end. Many hedge funds used the Spacs as a kind of money market fund to park money free of charge and were actually not interested in the planned merger.

At Signa, the Spac investors have raised a total of around $ 500 million in fresh money. According to financial circles, the new donors include tech investor Softbank, the sovereign wealth fund Mubadala from Abu Dhabi and the Public Investment Fund from Saudi Arabia.

The German RAG Foundation is increasing its stake, as is the financial investor Bridgepoint, which is also involved through an additional deal and will hold nine percent in the future. The share of René Benko’s Signa group of companies, which is behind the Galeria Karstadt Kaufhof department store group, has fallen to 48 percent.

Signa Sports will use the proceeds from the deal to purchase Bridgepoint’s UK online bike retailer Wiggle. The European market leader takes over the number two on the continent.

The online trade in sporting goods, including bicycles, has grown rapidly during the pandemic. In view of closed sports facilities, people were condemned to outdoor sports and bought more online, also because shops were temporarily closed.

Signa Sports United, which specializes in tennis, team sports and outdoor clothing in addition to cycling, will post sales of 1.4 to 1.55 billion euros on a pro forma basis in the current financial year, but had to contend with delivery bottlenecks. According to earlier information, revenues will grow by more than 25 percent annually over the next five years. The profit margin should triple to twelve to 15 percent in the long term. The global sporting goods market is estimated at more than $ 1 trillion a year.

More than seven million customers annually

Signa Sports actually wanted to go public on the capital market as early as 2018 via a classic IPO, which should lead to a valuation of around one billion euros. Signa then decided on a private financing round. Since then, the Japanese retail group Aeon and the Thai Central Group as well as the German R + V insurance group have been involved.

According to its own information, the company is the world’s largest pure online sporting goods retailer and operates more than 80 internet shops in 17 countries and has more than seven million online customers every year. The platform is independent from the other Signa Holding retailers, but also works with independent retailers. For example, there is a cooperation with around 600 bicycle dealers to whom customers can have bicycles bought online delivered.

To date, 67 percent of Signa Sports United’s business is in Europe. The USA has a share of nine percent. The company wants to grow significantly there. At 63 percent, bicycles are the heavyweight of the business, including brands such as Probike, Bikester and Wiggle, followed by tennis with 17 percent, outdoor with 13 percent and team sports, for example basketball, with seven percent.

The three largest sports retailers worldwide are Decathlon from France, Dick’s from the USA and JD Sports from Great Britain, but together they only have a market share of around seven percent. Signa Sports sees buying opportunities in the area of ​​sports retailers with around 30 to 80 million dollars in sales and regionally limited influence.

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