Booktopia shelves $100 million-plus IPO

Booktopia, led by CEO Tony Nash, rivals Amazon for Australian book buying. Picture: Jane Dempster/The Australian.

Online retailer Booktopia Group has decided to shelve its $100 million-plus listing and instead will consider other growth avenues for the business, including possible investment by trade buyers or private equity.

Australia’s biggest online book retailer was seeking to raise $40m, comprised of a $30m primary raise and a $10m selldown on Wednesday, as early as this month as part of its listing.

But, as first reported on The Australian’s BusinessNow blog, feedback from institutional investors was that, despite double digit revenue growth over a number of years, a string of disappointments in the retail sector was weighing on fund managers.

It comes after shares in the ASX aspirant were priced at $2 each, equating to 0.8 times forecast sales on an enterprise value basis.

It also follows a recent Morgans and Minnett investor roadshow with management.

Investors were understood to be earlier receptive to the pricing, which implied a $105m market value upon listing.

However, many have questioned how the group would fight off competition from larger rival Amazon.

The company was forecasting $104.5m in revenue for financial year 2017 and earnings before interest, tax, depreciation and amortisation of $2.1m.

The trading multiple implied by the IPO price was in line with other online retailers.

Counting in Booktopia’s favour was the local company’s large inventory of 128,000 titles in its Sydney distribution centre.

About 40 per cent of its sales come from local authors.

It comes after equity investors were deterred by the recent poor performance of other online retail businesses, including Redbubble, Temple and Webster and SurfStitch.

Adding to the retail sentiment was a profit downgrade from the Reject Shop on Wednesday.