Apr 29, 2023; Mexico City, Mexico; New Era caps are on display during an MLB World Tour game at Estadio Alfredo Harp Helu. Mandatory Credit: Kirby Lee-USA TODAY Sports/File Photo Purchase License Rights
NEW YORK, Sept 7 (Reuters) – New Era Cap LLC, a supplier of headwear to major US sports leagues, has begun preparations for an initial public offering (IPO) in New York valued at US$4 billion to US$5 billion. Dollar could have to people who are familiar with the matter.
New Era, which makes caps associated with the National Football League (NFL), Major League Baseball (MLB) and the National Basketball Association (NBA), has invited investment banks and law firms to solicit roles in its IPO this month, sources said.
The company, which is controlled by its founding family and in which private equity firm ACON Investments holds a significant minority stake, is targeting an IPO in 2024, the sources said. MLB, NFL and NBA hold minority interests in New Era.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) could reach or exceed $300 million in 2023, the sources added.
The sources asked not to be named as the matter is confidential.
Kevin R. Wilson, New Era’s executive vice president and chief financial officer, said the company is “always considering alternatives to financially position the company for future growth, but we have no strategic plans to share at this time. We do not comment on speculation”, .
An ACON spokesman said the company is continually reviewing “all strategic alternatives” for New Era, but declined to comment specifically on the IPO plans.
The IPO market is heating up after a dry spell of almost a year and a half. Chip designer Arm Holdings Ltd, grocery delivery service Instacart and marketing automation platform Klaviyo are among the companies working on multi-billion dollar offerings expected this month.
New Era was founded in 1920 in Buffalo, New York by German-American businessman Ehrhardt Koch, who borrowed $5,000 from his aunt to start a business specializing in the manufacture of custom-fit men’s hats known as Gatsby or Ivy League caps, concentrated, that matched men’s suits.
The company is now managed by Chris Koch, the fourth generation of the family. He recently delegated day-to-day operations to Lieutenants Jim Grundtisch and Jim Patterson.
New Era’s flagship 59FIFTY cap is frequently worn by celebrities on the runways and red carpets. Introduced in 1954, it was customized for select teams in the MLB, NFL, and NBA.
According to the company, New Era apparel products are currently sold in over 1,000 retail stores worldwide in more than 125 countries.
Last year, ACON Investments increased its stake in New Era and launched a $700 million continuation fund for investors interested in joining.
Separately, Chris Koch told Bloomberg News Thursday that New Era secured a $600 million refinancing loan from banks.
Reporting by Abigail Summerville, Echo Wang and Anirban Sen in New York; Edited by David Gregorio
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