Allegro-owned retailer completes $44m Australia IPO

The company sold 28.3 million shares for A$2.16 apiece, according to a filing. Allegro took A$24.6 million off the table, reducing its holding from 64.4% to 43.5%. Separately from the IPO, BB Retail Capital, a private investment group controlled by retail industry veteran Brett Blundy, acquired A$40 million worth of BLG shares for A$1.94 apiece, and now owns 16.4% of the company.

BLG achieved an enterprise value (EV) of A$248.7 million, which translates into an EBITDA multiple of 4.0x, based on forecast pro forma results for the 2021 calendar year.

Turnaround specialist Allegro agreed to acquire the business from Greenlit Brands, a subsidiary of South Africa-based retail holding company Steinhoff International, in 2019. Greenlit divested the assets – which included Best & Less, Postie, furniture retailer Harris Scarfe, and Debenhams Australia – to focus on its household goods operations.

Harris Scarfe, a 170-year-old brand with 21 stores, and Debenhams Australia, which had one store, were placed into administration within weeks of the deal being announced. It was conditional on the restructuring of Harris Scarfe and Debenhams Australia's debt. The fair value of the assets acquired by Allegro was A$65.5 million.

BLG operates a profitable 245-store network – 185 in Australia and 60 in New Zealand – as well as an online retail channel. The company claims to be one of the largest value apparel omnichannel retailers across the two markets, with more than half of its sales in the baby and kids categories. Best & Less is the Australia brand, while Postie features solely in New Zealand.

BLG generated A$625 million in revenue for the 12 months ended June 2020, up from A$608.7 million a year earlier. Online sales made up 9.3% of the total, but this represented an 80% increase on 2019. Over the same period, EBITDA rose from A$24.5 million to A$27 million, and net profit increased from A$13.8 million to A$16.1 million.

The company expects to post pro forma sales of A$675.7 million for the 2021 calendar year, with EBTIDA and net profit coming in at A$62.4 million and A$41.3 million, respectively.

Allegro made the BLG acquisition via its third fund, which closed in late 2019 at the hard cap of A$290 million. There is also a A$92 million sidecar for larger deals. Recent activity includes the purchase of Toll Global Express, the express delivery division of domestic logistics giant Toll Group.

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• Topics
• Australasia
• IPO
• Consumer
• Australia
• New Zealand
• Allegro Funds