Parka maker Canada Goose Holdings Inc. filed paperwork Wednesday for an expected $200-million (U.S.) initial public offering, the third debut in the past six months from a Canadian company that sells trendy consumer products.
Toronto-based Canada Goose, which sells parkas that start at $800, is currently owned by its founding family and U.S. private equity fund Bain Capital. These backers plan to take the company public with a dual class share structure, with management and Bain Capital initially maintaining control of a company valued at about $2-billion, according to Bloomberg News.
The subordinate voting shares being sold to the public by the company and the selling shareholders Bain and DTR LLC, an entity indirectly controlled by Canada Goose's CEO Dani Reiss, have one vote per share. The holders of its multiple voting shares have 10 votes per share. According to a Bloomberg report, Canada Goose's owners will sell 10 to 15 per cent of the firm.
The company said it plans to use proceeds of the share sale to pay back some of its debt. Canada Goose is striving to earn brand recognition on both sides of the border by listing its shares on both New York and Toronto stock exchanges.
After a dearth of IPOs in 2016, the Canada Goose filing is the latest signal that the market for new listings is coming back to life.
As part of the IPO, the company released financial data that show selling pricey parkas translates into healthy profits.
Its sales in fiscal 2016 were $291-million (Canadian) and the company's gross profit was $146-million, which means gross margins were 50 per cent of revenue. The company's net income, after interest payments and taxes, was $26.5-million.
Canada Goose was founded in Toronto in 1957, with Bain Capital acquiring a 70-per-cent stake in 2013. The company sells outerwear through select retailers and distributors in 36 countries, its own e-commerce websites in Canada, the U.S., Britain and France, as well as two recently opened retail stores in Toronto and New York City.
In its prospectus, the company said it is planning to grow by being more than just a winter brand and expanding its product line beyond outerwear, as well as trying to increase its appeal in markets with more temperate climates.
It also plans to open additional e-commerce and retail stores.
Investment banks CIBC World Markets Inc., Credit Suisse Securities (Canada) Inc., Goldman Sachs Canada Inc. and RBC Dominion Securities Inc. are leading the Canada Goose IPO.
The Canada Goose IPO follows a well-received $460-million debut from retailer Aritzia Inc. last September and a $125-million offering from restaurant chain Freshii Inc. last month.
Prior to these transactions, the Canadian IPO market was in the doldrums, with 2016 ranking as the worst year on record for stock-market debuts, according to accounting firm PricewaterhouseCoopers LLP. However, the rally in stock markets that began last spring is expected to bring more companies to market. Dean Braunsteiner, national IPO leader at PwC in Canada, said: "Companies considering an IPO are watching that steady upward trend like everyone else. They won't want to get left behind."
Calgary-based STEP Energy Services Ltd. filed to go public on the TSX last week and a number of energy companies are expected to tap public markets if investors remain willing to commit capital to the sector.