Apax-backed Takko Considering Stock Market Float

FRANKFURT, Germany — German discount fashion chain Takko, owned by private equity group Apax Partners, is considering a stock market flotation among other financing options, a company spokeswoman said.

German daily Boersen-Zeitung reported on Tuesday that Credit Suisse and Deutsche Bank will organise a potential initial public offering (IPO), which may take place in the second quarter.

Apax, which bought the firm in 2010 for €1.2 billion ($1.5 billion) from private equity peer Advent International, declined to comment.

It has had to repeatedly inject equity into Takko after its bid to sell more expensive clothes failed and the firm came close to breaching its debt covenants.

Takko, which currently employs 18,000 staff in 1,900 shops, later returned to its focus on less expensive clothes at its mainly out-of-town network of stores.

A person familiar with the industry said that given the company's history, Takko may not reap a valuation of more than 6 to 7 times its expected core earnings.

Last October, Takko refinanced its debt, cutting coupons on new notes by up to 4.50 percentage points compared to its outstanding bond. Ratings agency S&P later raised Takko's rating to B from CCC+.

Takko posted earnings before interest, tax, depreciation and amortisation of €144.3 million for the year to last October.

By Hans Seidenstücker and Arno Schuetze; editor: Dasha Afanasieva.