Corporate | 18 May 2018 08:00

home24 plans initial public offering

DGAP-News: Home24 AG / Key word(s): IPO

18.05.2018 / 08:00
The issuer is solely responsible for the content of this announcement.

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HOME24 PLANS INITIAL PUBLIC OFFERING

• Leading pure-play online destination brand for home & living in continental Europe and Brazil is preparing a listing on the Frankfurt Stock Exchange
• home24’s unique business model combines a broad and curated third-party offering, generating high conversion, with a vertically integrated private label business, offering superior margins
• home24 addresses the large and untapped online home & living market, where the total market size amounted to EUR 117 billion in its eight markets in 2017
• Following continuous margin improvements, home24’s strategic goal is to reach adjusted EBITDA breakeven on a group level within approximately the next 18 months
• Targeted IPO proceeds of EUR 150 – 200 million will primarily be used to fund the rollout of home24’s go-to-market approach and to accelerate its first order profitable growth

Berlin, 18 May 2018 – home24 SE (the “Company” and, together with its consolidated subsidiaries, “home24”), today announced its intention to list its shares on the regulated market (Prime Standard) of the Frankfurt Stock Exchange. Only new shares will be placed in the context of the planned initial public offering (the “Offering”) ( i.e. , none of the Company’s existing shareholders will divest their shares). In preparation of the planned Offering, the Company has been transformed into a European stock corporation ( Societas Europaea (SE)).

Leading pure-play online destination brand for home & living in continental Europe and Brazil Founded in Berlin in 2009, home24 is the pure-play market leader and go-to destination for home & living online shopping in continental Europe and Brazil. By satisfying the different tastes, styles and budgets of its currently 1.1 million active customers, home24 has built one of the largest and most relevant online offerings with over 100,000 SKUs – from large to small furniture items – sourced from more than 500 suppliers globally.

Unique business model driving superior economics and customer proposition
home24’s products are marketed on its platform, which combines two distinct business models: Firstly, the third-party and white label business, which offers a broad and curated assortment to cater to the long tail of the home and living mass market, generating a high order conversion. These items are usually not kept in stock by home24, minimizing inventory risk. And secondly, the private label business, which is deeply vertically integrated. It generally features bestsellers sourced at highly competitive prices directly from selected manufacturers and other suppliers, offering superior margins and allowing for comparably short delivery times.

By combining these two models, home24 has mastered the unique challenge and complexity posed by the online home & living industry to offer an assortment that is both broad and relevant to satisfy a diverse customer base. This approach allows the Company to grow its number of new customers at efficient customer acquisition costs, already recovering these costs with the first order.

Marc Appelhoff, Co-CEO of home24, said: “Since founding home24 in 2009, we have revolutionized the way people can buy home & living products. The planned Offering will provide us with the capital needed to further roll out our go-to-market approach and to accelerate our first order profitable growth. We are excited about the new opportunities this step will open up for us, as we continue to offer our customers the best value and an inspiring home & living shopping experience.”

Benefitting from the large, untapped market opportunity in the online home & living industry
The home & living market is characterized by a high degree of fragmentation, both with respect to suppliers and retailers. However, it is one of the largest consumer industries with an aggregate market volume in home24’s eight markets ^[1] of more than EUR 117 billion in 2017. ^[2] Online penetration in these markets remains relatively low, currently amounting to less than 5 percent. ² At the same time, the online home & living segment in home24’s markets grew at a CAGR of 11 percent between 2012 and 2017. ² Driven by favorable demographic trends and the further migration from offline to online in the home & living segment, home24 expects this growth to accelerate significantly, offering huge untapped potential.

Superior customer experience
home24 strives to offer its customers an unparalleled broad, curated and relevant selection of home & living products at attractive prices. Adding to the high degree of convenience, home24 offers short delivery times with free deliveries and returns in all European markets. home24 has invested in its state-of-the-art, scalable technology platform, including advanced big data analysis tools, to offer its customers the best shopping experience. In addition, the Company operates seven showrooms in central metropolitan areas in Germany and Austria to complete the customer journey. home24 has one of the most competitive product offerings in its target markets, putting it in the pole position to be the dominant mass market player in these countries.

Strong financial profile, combining accelerating growth and a clear path to profitability
Since its foundation, home24 has built a strong financial profile, combining significant growth with a clear path to profitability. Following years of explosive growth at a CAGR of 129 percent between 2010 and 2015, home24 began taking the next step to support future growth by making significant investments to scale its platform in 2016. Next to optimizing its end-to-end processes, the Company also professionalized its back-end fulfillment platform, mastering the complexity of the online home & living industry. From mid-2017 onwards, home24 re-accelerated its growth, with revenue for the full year amounting to EUR 276 million. In the three months ended March 31, 2018, the Company increased its revenue significantly to EUR 85 million, which corresponds to a growth rate of 30 percent on a constant currency basis year-on-year. At the same time, home24 improved its adjusted EBITDA margin from minus 32 percent in 2015 to minus 6 percent in the three months ended March 31, 2018. These results underpin the Company’s strategy of achieving adjusted EBITDA break-even on a group level within approximately the next 18 months.

Prime Standard listing and pure primary Offering in Germany and Luxembourg
The Company intends to list its shares on the regulated market ( regulierter Markt ) of the Frankfurt Stock Exchange ( Frankfurter Wertpapierbörse ) and, simultaneously, within the sub-segment thereof with additional post-admission obligations (Prime Standard).

The planned Offering will consist of initial public offerings in Germany and Luxembourg and private placements in certain jurisdictions outside Germany and Luxembourg. All proceeds generated via the planned Offering will be attributable to the Company, making such Offering a pure primary offering with none of the Company’s existing shareholders divesting their shares. Any new shares for the primary greenshoe will be issued utilizing the Company’s authorized capital.

As of the date of this release, Rocket Internet SE directly and indirectly holds approximately 41 percent of the Company current share capital and Kinnevik holds approximately 17 percent. The final number of shares to be placed with investors in connection with the planned Offering will depend on the offer price set at the end of the bookbuilding process and will determine the ultimate free float.

Proceeds from the Offering earmarked to fund continued growth
The Company targets a fixed amount of gross proceeds from the planned Offering, which will be determined upon launch and is expected to amount to between EUR 150-200 million. The Company intends to use the net proceeds from the Offering to fund the roll-out of the go-to-market approach to all its current geographies, the continued forward integration of its delivery chain, investments into profitable growth, property, equipment and technology, as well as the repayment of outstanding liabilities.

Berenberg, Citigroup, and Goldman Sachs International are acting as Joint Global Coordinators and Joint Bookrunners.

^[1] Germany, Austria, Belgium, France, Italy, the Netherlands, Switzerland and Brazil
^[2] Source: Euromonitor

About home24
home24 is the leading home & living pure-play e-commerce platform in continental Europe and Brazil. With over 100,000 SKUs sourced from over 500 suppliers, home24 offers its customers a unique selection of large and small furniture items, outdoor furniture, mattresses and lighting products. home24 is headquartered in Berlin and has more than 1,000 employees worldwide. The company is active in seven European markets: Germany, France, Austria, the Netherlands, Switzerland, Belgium and Italy. home24 is also active in Brazil. In Europe, the company delivers its products – regardless of size and weight – free of charge to its customers’ homes and also offers free returns. The product offering of home24 comprises numerous brands, including a large number of private labels. Further information can be found on the company’s website: www.home24.com

Media contacts:

Knut Engelmann
Email: knut.engelmann@cnc-communications.com
Mobile: +49 174 234 2808

Maximilian Karpf
Email: maximilian.karpf@cnc-communications.com
Mobile: +44 7970 716953
Investor contact:

Philipp Steinhäuser
Email: ir@home24.de

Disclaimer

This release is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada or Japan. It does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada or Japan. The shares mentioned herein have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”). The shares may not be offered or sold in the United States, except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of shares of the Company in the United States.

This release is only being distributed to, and is only directed at, (i) persons who are outside the European Economic Area or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “Relevant Persons”). The shares of the Company are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such shares will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this release or any of its contents.

This release is not a prospectus for the purposes of Directive 2003/71/EC, as amended (the “Prospectus Directive”), and as such does not constitute an offer to sell, or the solicitation of an offer to purchase, shares of the Company. Investors should not subscribe for any shares referred to in this release except on the basis of the information contained in a prospectus relating to the shares. Such prospectus is still to be published and following such publication, investors will be able to obtain a copy of it from home24 SE, Greifswalder Straße 212 – 213, 10405 Berlin, Germany, or from the Company’s website.

In any member state of the European Economic Area other than Germany and Luxembourg, this release is only addressed to, and is only directed at, “qualified investors” within the meaning of Article 2 para. 1 lit. e) of the Prospectus Directive.

This release contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management of the Company. Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this release or the underlying assumptions. The Company does not assume any obligations to update any forward-looking statements.

Each of the Company and the Joint Bookrunners and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this release, whether as a result of new information, future developments or otherwise.

The Joint Bookrunners, some of which are authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, are acting exclusively for the Company and no-one else in connection with the planned Offering. They will not regard any other person as their respective clients in relation to the planned Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the planned Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the planned Offering, the Joint Bookrunners and any of their affiliates, may take up a portion of the shares offered in the planned Offering as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such shares and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in the prospectus, once published, to the shares being offered, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or acquisition, placing or dealing by, the Joint Bookrunners and any of their affiliates acting in such capacity. In addition the Joint Bookrunners and any of their affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which the Joint Bookrunners and any of their affiliates may from time to time acquire, hold or dispose of shares of the Company. The Joint Bookrunners do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of the Joint Bookrunners or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this release (or whether any information has been omitted from the release) or any other information relating to home24, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, or for any loss howsoever arising from any use of this release or its contents or otherwise arising in connection therewith.

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