Seraphine investors take business back into private ownership just 18 months after IPO
Investors at maternitywear retailer Seraphine are taking the business back into private ownership after agreeing to purchase all the remaining stock it does not already own.
If the deal goes through, Mayfair Equity Partners (MEP) would be purchasing the remaining shares at 30p-a-share, a discount of around 90% to the initial public offering price of 295p only 18 months ago.
MEP currently holds approximately 42.7% of the voting rights in Seraphine.
Seraphine was founded in 2002 by entrepreneur Cécile Reinaud offering stylish, modern and accessibly priced maternity wear. It garnered a high profile celebrity following and was worn by the Duchess of Cambridge during her pregnancies.
In its latest financial results, the company reported an adjusted EBITDA loss of £1.5m for the 26 weeks ending 2 October, compared to a £3m profit in 2021. The company said its performance was impacted by the "continuing challenging retail trading environment and softer trading during the summer months".
Gross sales and basket sizes increased but as returns rates reverted to pre-pandemic levels, net sales were impacted. Despite this increase, the company said it was not seeing returns rates across its markets exceed pre-pandemic levels.
Sharon Flood, Chair of Seraphine said: "Seraphine has faced an extraordinary convergence of challenges since listing in 2021 including the global supply chain crisis, the cost of living crisis and substantial inflation in online marketing costs.
"Whilst the whole retail sector has been affected by these issues, Seraphine, a relatively smaller company new to the London Stock Exchange with a large reliance on e-commerce, has, we believe, been disproportionately challenged.
"Despite the huge efforts of our people and management, who have managed to improve gross product margin, achieve higher basket sizes and expand into several new markets, the business continues to operate in a very uncertain and challenging market. Whilst we are cautiously confident in our ability to restore profitable growth in the future, additional capital now would enable us to make investments to accelerate our growth strategy. Seeking this capital on-market would likely be highly dilutive, and the restoration of value would take time.
"The Seraphine Board, therefore, believes that this transaction would remove the substantial costs associated with being listed and afford management the time and space to give their full attention to a return to profitable growth."
Bertie Aykroyd, partner of Mayfair Equity Partners, commented: "As a major shareholder in the Company, Mayfair remains supportive of management and their strategy. However, Mayfair believes that the Company’s share price is negatively impacting Seraphine’s ability to deliver on its strategy and attract and retain talent.
"We believe that it would be beneficial for Seraphine, its employees, and its other stakeholders to continue its growth and development as a private company. This would allow Seraphine to operate without the material level of costs of maintaining a public listing, supporting the Company during this period of macro-instability. As part of this transaction, we are also providing additional capital that will strengthen Seraphine’s balance sheet and support our intention to safeguard the business.
"Anticipating that current pressures on the Company and market are to persist for the near-term, our objective is also to provide liquidity to certain shareholders to realise their investment for cash at a significant premium to the current market value."