It is not uncommon for emerging companies in today’s start-up world to go public to raise funding. While seeking private investment through seed funding is one way, many companies prefer the route of going public as the returns are high.
Made of numerous fashion brands, the Global Fashion Group, is planning to go public. The move comes in the light of attempting to reap €300M through public shareholding.
Besides, in the backdrop, one has to remember that the company is currently making loss. As a result, there is little idea about the cost of each share and the company’s valuation on Frankfurt’s IPO. However, based on news reports, the company’s current value stands at about US$ 1.23 billion. This is basis the largest stakeholder’s claim that its 35% share in the company are worth SEK 4.1 billion.
From the earnings of public shareholding, the company aims to ramp up production and roll out new activities. As a result, this will help Global Fashion Group improve its valuation. An example is Zalando, another start-up that belongs to the Rocket Internet group. It managed to double its valuation since it went public in 2014.
The Move will Help Compete in Emerging Markets
Besides the need to improve the overall valuation of the company, the move will also aim to provide a head start to the brand in emerging economies. The plan is to ensure that the Global Fashion Group stays ahead of the established e-commerce companies like Amazon in the emerging markets.
Moreover, it is important to understand that the opportunities are aplenty when it comes to emerging markets. While mature regions like the U.S. and Europe have already reached saturation when it comes to sales, companies built keeping in mind emerging markets will survive on their own. GFG predicts that the market potential of the regions that it is operating in is currently €320 billion. However, these are still early figures, and time will only enhance the potential.