Authentic Brands Group (ABG) is a brand management, marketing, and entertainment company. It recently announced its intention to go public via initial public offering (IPO), and investors are excited at the chance to own a piece of this fascinating business.
So, what is Authentic Brands, and is it worth getting excited about?
The company owns and licenses merchandise for many of America’s most recognized apparel, entertainment, and athletics brands. It also partners with some of the world’s most lucrative stars.
Across Social Media, ABG has over 30 brands and 230+ accounts. It has accumulated over 5.4bn YouTube video views, 200m+ annual engagements, and 270m+ social media fans.
How Authentic Brands makes money
The ABG platform combines brand strategy, innovative marketing, rich content, and centralized data analytics to fortify its presence.
ABG typically acquires brands for their fame and nostalgic feel-good factor. This can be ascertained from its extensive portfolio of instantly recognizable names.
Juicy Couture, JCPenney, Brooks Brothers, Forever 21, Aeropostale, Nine West, and Barney’s New York are just some of its top performers.
But it also owns the license rights to international icons like Marilyn Monroe, Muhammad Ali, Sports Illustrated, and Shaquille O’Neal.
Despite its impressive line-up, Authentic Brands has only been around for just over a decade.
Founded in 2010 by Chairman and CEO Jamie Salter, the company has rapidly built an empire of covetable labels.
In June, it agreed to buy the heritage brand unit of PVH Corporation in a $220m cash deal. This adds brands Geoffrey Beene, Izod, and Van Heusen to its collection.
The company makes money by licensing some of these affluent brands for marketing activities and events.
For instance, ABG works closely with Lonnie Ali, the wife of late, great boxing legend Muhammad Ali, to carry his legacy forward. Together they agree on relevant and meaningful partnerships across lifestyle, entertainment, media, and consumer products.
At the fifth annual Ali Festival in June, festivities included virtual and in-person events. Meanwhile, ABG joined forces with Champion to launch a Muhammed Ali collaboration through exclusive clothing drops.
Capturing nostalgia and notable brands is a winning combination
The licensing market was worth around $281bn in 2020 and is projected to be worth over $413bn in 2027. That’s a compound annual growth rate (CAGR) of 5.37%.
ABG snaps up brands that appear to be past their prime, reinvigorating them with a new lease of life and cashing in on their licensing appeal.
It seeks brands with a real-world charm and global reach rather than simply a retailer with limited scope.
Capturing the nostalgia associated with the brand allows for a strong storytelling narrative. This is perfect for content creation and inventing an immersive experience through modern omnichannel marketing and strategic distribution.
When will Authentic Brands IPO?
ABG’s initial S-1 filing with the United States Securities and Exchange Commission (SEC) states it intends to raise $100m at IPO. But that’s most likely a placeholder figure, which is expected to change as further details emerge.
The company has not yet confirmed an IPO date or the number of shares it intends to float. However, it plans to list on the New York Stock Exchange (NYSE) under the ticker symbol AUTH.
In May, a rumor surfaced that ABG had confidentially filed for IPO, and Bloomberg reported this would value it at around $10bn.
Back in 2019, ABG was valued between $4bn and $5bn after BlackRock (NYSE: BLK) bought a 30% ownership stake. So, this new valuation estimates a doubling of its worth in just two years.
The company will release two classes of shares, with its ‘A-shares’ available to anyone and its ‘B-shares’ complete with enhanced voting rights, reserved for Salter and his management associates.
The IPO is underwritten by some of the most prominent Wall Street institutions around, including Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Wells Fargo (NYSE: WFC), JP Morgan (NYSE: JPM), Jefferies (NYSE: JEF), UBS (SWX: UBSG), Cowen (NYSE: COWN), Guggenheim (NYSE: GOF), Canaccord (TSE: CF), and KeyBanc Capital Markets, among others.
Is Authentic Brands a buy at IPO?
Authentic Brands offers investors a very interesting stock buying opportunity. While bricks-and-mortar stock offerings have been shunned for more lucrative e-commerce options in recent years, ABG could allow investors a less risky foray into this sector.
The company generates its income from the perceivable value in its brand IP and as long as that thrives, how the products reach consumers is of less concern.
The company has shown resilience through the pandemic, and we are living in a time when nostalgia is prevalent. Meaning people are willing to part with their cash in an attempt to hold onto the past.
It’s a powerful combination and, depending on the initial offering price, may prove a lucrative investment opportunity for those looking for an alternative way to capture the power of retail.