Retailer Henderson may hold an IPO

The Henderson men’s clothing chain announced its intention to conduct an initial public offering (IPO) of shares on the Moscow Exchange. The retailer may become the first public company among the players in the Russian fashion market. According to analysts, at the end of 2022, clothing sales in Russia decreased due to consumer savings and stagnation of real incomes. However, this year experts predict a recovery in the turnover of this segment of the retail market.

The Russian chain of men’s clothing and footwear stores Henderson has announced plans to enter an IPO on the Moscow Exchange, according to the company’s announcement. The start of trading in the retailer’s shares is scheduled for early November.

The bulk of the offer will consist of shares issued as part of the additional issue. Henderson shareholder and founder Ruben Harutyunyan may supplement the offer with part of the shares from his stake, but at the same time plans to retain a dominant stake in the company’s authorized capital. Henderson notes that based on the results of the public offering, the share of free float, taking into account the additional issue and offer of shares by the founding shareholder, may amount to more than 10%.

The company plans to use the raised funds to finance further growth of the network. The offer will be available to Russian institutional, qualified and non-qualified investors.

HRG’s revenue at the end of 2022 increased by 30.6%, to 12.4 billion rubles, net profit quadrupled, to 1.8 billion rubles. According to Infoline, the retailer has a revenue share of about 2% of the men’s clothing and footwear market, which is significant among other specialty men’s clothing chains. Thus, the share of the Kanzler network is 1.1%, Sudarya – 0.7%, Diplomat – 0.4%.

Henderson became the first issuer from the fashion segment on the exchange. At the same time, plans to enter the IPO of another large Russian fashion retailer Melon Fashion Group became known in 2021 (see “Kommersant” dated September 30, 2021). However, this year in an interview RBC Melon Fashion Group CEO Mikhail Urzhumtsev said that in the spring of 2022 the company had to abandon these plans.

In conditions of stagnation of real incomes of the population and a reduction in consumer spending on non-essential goods, according to Infoline estimates, the volume of the Russian retail sales market for clothing and footwear at the end of 2022 decreased by 10.3%, to 2.6 trillion rubles, separately the men’s market clothing and footwear – by 7.3%, to 721 billion rubles. At the same time, Infoline analysts predict an increase in the retail sales market for clothing and footwear by the end of 2023 by 11.5%, to 2.9 trillion rubles, and for men’s clothing and footwear – by 4.7%, to 755 billion rubles, which will be associated with the effect of deferred demand, the growth of real incomes of the population and the intensification of inflationary processes due to the weakening of the ruble.

This year, there have already been three public offerings of shares on the Russian market: the Astra, Genetico and SmartTechGroups groups.

Earlier, experts noted that a revival in the Russian IPO market is expected in the fourth quarter. In particular, such plans were also announced by the Eurotrans gas station chain and the Kaluga distillery Kristall by the end of the year; the placement of shares could be carried out by the systemically important Sovcombank (see “Kommersant” dated October 15). Whereas in 2022, only one IPO of the scooter rental service Whoosh took place in Russia.

As experts previously noted, over the past 12 months there has been a recovery in quotes on the Russian stock market, which made it possible to place shares at an adequate price. In addition, Eduard Dzhabarov, Managing Director for Debt Capital Markets at Sberbank, drew attention to the fact that the equity capital market makes it possible to increase business transparency for the owner, improve corporate governance and attract additional funds.

Alina Savitskaya