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Dr Martens Hits £3.7B Valuation in London Debut

Dr Martens Originals Source: Courtesy of Dr Martens
Source: Courtesy of Dr Martens

In 1967, The Who’s Pete Townshend scissor-kicked a brand of workmen’s boots to iconic status. Now, that brand is making waves in another debut: It’s the first day of trading for Dr. Martens Plc on London’s stock market.

After pricing its initial public offering at 370 pence a share, the top end of an initial range, the stock surged as much as 26 percent Friday. Dr. Martens shareholders raised £1.3 billion ($1.8 billion) in the offering.

Not a bad showing for footwear that got its start in the ruins of postwar Germany. Later marketed in Britain, its boots were priced at two pounds apiece, with its eight-hole workmen’s boot becoming a seminal piece of footwear for Britain’s rebellious youth in the following decades.

Designed with an air-cushion sole and known as “Doc Martens” to fans, the brand remains a global fashion statement recognisable by both Boomers and Millennials.

“It’s quite rare for an iconic brand to float,” said Oliver Brown, a fund manager at RC Brown, which participated in the offering. “Dr. Martens is attractive to investors because it has a loyal customer base, high margins and holds a lot of growth potential by expanding its store presence and making inroads in markets such as North American and China,” he said.

Dr. Martens is one of several retailers to tap European public markets over the past few months. It is the largest IPO in London by a UK company since online shopping emporium THG Plc, which operates sites selling everything from skincare and beauty products to protein powder, in September, according to data compiled by Bloomberg.

The coronavirus pandemic and ensuing lockdown orders have choked brick-and-mortar stores, pushing consumers toward online shops during the past year. Still, Dr. Martens sales rose 18 percent to £318.2 million in the six months ended Sept. 30, while gross profit increased 20 percent. The retailer gets about 20 percent of its sales from e-commerce, up from just 7 percent in 2015.

Others taking advantage of the pandemic-fuelled online shopping boom include Poland’s InPost SA, which operates automated parcel lockers for online deliveries and soared in its Amsterdam trading debut Wednesday, while virtual greeting-card company Moonpig Group Plc and used-car platform Auto1 Group SE are taking investor orders for public offerings.

“There may be potential bubbles in parts of the market but that doesn’t apply to good, strong consumer brands and high-quality IPOs, which continue to be in short supply,” Brown said.

Another Six Decades

Dr. Martens is named after German doctor Klaus Martens, who teamed up with mechanical engineer Herbert Funk in the 1940s to begin producing shoes from disused military supplies. The company has had bumps in the road, as it nearly went bankrupt in 2003 and moved production to China at the cost of jobs in the UK.

The IPO valued at Dr. Martens at £3.7 billion, which is more than 10 times the £300 million owner Permira Holdings paid for the bootmaker in 2014. The offering comprised 350 million existing shares, the company said in a statement Friday.

The Griggs family, which sold Dr. Martens to Permira, along with employees and directors of the company, also held shares in the company before the IPO. About 35 percent of the company’s shares are available for trading. Shareholders can sell another 53 million shares if there’s enough demand, which would increase the size of the offering to 1.49 billion pounds.

Permira will retain a majority stake of 42.9 percent post listing, assuming the over-allotment option is exercised in full. “The strategy has always been to run this brand for the next six decades,” Permira Partner Tara Alhadeff said in an emailed statement.

“Dr Martens has always been an undisputed global icon, a brand like no other, inspiring deep engagement and passion in consumers from all walks of life for over six decades,” she said.

The company had secured cornerstone investments of £250 million from BlackRock Inc., £100 million from Janus Henderson Group Plc and £75 million from Merian Global Investors.

The deal gathered enough investor interest to cover all the shares on offer within about an hour of opening its order book. Dr. Martens accelerated the IPO timeline, closing its offering two days earlier than originally planned.

Goldman Sachs Group Inc. and Morgan Stanley are joint global coordinators, while Barclays Plc, BofA Securities, HSBC Holdings Plc and Royal Bank of Canada will be joint bookrunners in the event the offer proceeds. Lazard & Co. is the company’s financial adviser.

By Swetha Gopinath.

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