Best & Less locks in demand for $60m initial public offering

A Best & Less store

Best & Less Group has secured $60 million for its initial public offering and will start trading as a public company next month.

Fund managers were told on Wednesday that the company’s owner, Allegro Funds, had received bids exceeding the offer size and it is understood that the IPO was sold down by 1pm.

The retailer will lodge its prospectus on Friday and start trading as a public company on a normal settlement basis on July 26.

Best & Less joins other companies that have locked in IPO demand and are about to list, with copper miner 29Metals beginning trade on Thursday and Property Exchange Australia starting to trade on July 2.

Pexa has recently brought on co-lead managers Ord Minnett, Wilsons and Morgans for its $3.3bn float to sell down the stock to retail investors, which will see some of the allocations to investors, including Link Administration Holdings which had commited to 47 per cent, scaled back.

Expectations are that Link will launch a share buy back for its investors following the float of Pexa, of which it earlier owned about 44 per cent.

The book build for the float opened Wednesday to raise $60m for the business now backed by retail tycoon Brett Blundy.

The Australian reported on Tuesday that Mr Blundy had made a $40m cash injection into the business which will see him own 16.4 per cent.

Mr Blundy has backed a number of high-profile retailers that have headed to the boards, including Adairs, Dusk, Lovisa and Universal Store.

Best & Less, which is 80 per cent owned by private equity firm Allegro Funds and the rest owned by management, shelved its IPO plans last month after it failed to gain traction with investors.

Its shares are priced this time at $2.16 per share with the same $271.2m market value as before.

Earlier, the raise was to be about $72.3m.

 

The earlier IPO plans for Best & Less would have seen Allegro offload about 30 per cent of its stake.

The latest deal sees Best & Less priced at about seven times its net profit for the 2021 calendar year.

Macquarie Capital and Bell Potter have been working on the float. Best & Less generates most of its money from children’s and babies’ clothing.

Collectively, it has more than 250 stores across Australia and New Zealand and employs more than 4000 people.

Mr Blundy chairs BB Retail Capital and has had success with the floats of companies he has backed.

He has sold businesses including Bras N Things, a retailer snapped up by US company Hanes in 2018 for $500m, and jewellery chain Lovisa, which he founded in 2010 and was listed in 2014 with a $210m market value.

Adairs was listed in 2015 with a $398m market value and his Aventus Property Group also floated in 2015 with a $686.5m market value.

Universal Store listed last year and is now worth $534m.