U.S. sports league caps maker New Era prepares for IPO-sources

[September 08, 2023]  By Abigail Summerville, Echo Wang and Anirban Sen

NEW YORK (Reuters) - New Era Cap LLC, a supplier of major U.S. sports league headware, has kicked off preparations for an initial public offering (IPO) in New York that could value it at $4 billion to $5 billion, according to people familiar with the matter.

New Era, which makes caps affiliated with the National Football League (NFL), Major League Baseball (MLB) and National Basketball Association (NBA), has invited investment banks and law firms to pitch this month for roles in its stock market debut, the sources said.

The company, which is controlled by its founding family and in which private equity firm ACON Investments holds a significant minority stake, aims to go public in 2024, the sources said. MLB, the NFL and the NBA hold minority stakes in New Era.

The company's earnings before interest, taxes, depreciation and amortization (EBITDA) may reach or surpass $300 million in 2023, the sources added.

The sources asked not to be identified because the matter is confidential.

Kevin R. Wilson, executive vice president and chief financial officer of New Era, said the company "is always considering alternatives to position the company financially for future growth, but we have no strategic plans to share at this time. We don’t comment on speculation,” .

An ACON spokesperson said the firm continually evaluates "all strategic alternatives" for New Era but declined to comment specifically on the IPO plans.

The IPO market is heating up following an arid spell that lasted close to a year and a half. Chip designer Arm Holdings Ltd, grocery delivery service Instacart and marketing automation platform Klaviyo are among companies working on multibillion-dollar offerings expected this month.

Apr 29, 2023; Mexico City, Mexico; New Era caps on display during a MLB World Tour game at Estadio Alfredo Harp Helu. Mandatory Credit: Kirby Lee-USA TODAY Sports/File Photo

New Era was started in 1920 in Buffalo, New York, by German-American businessman Ehrhardt Koch, who borrowed $5,000 from his aunt to launch a business focused on making men’s fitted caps, known as Gatsby or Ivy League caps, that would match men’s suits.

The company is now led by Chris Koch, the fourth-generation scion of the family. He recently delegated day-to-day operations to his lieutenants, Jim Grundtisch and Jim Patterson.

New Era's flagship 59FIFTY cap is donned often by celebrities on runways and red carpets. It was launched in 1954 and customized for select teams in MLB, the NFL and the NBA.

New Era's apparel products are currently sold in over 1,000 retail stores worldwide in more than 125 countries, according to the company.

Last year, ACON Investments increased its ownership stake in New Era and launched a $700 million "continuation" fund for investors that are keen to join it.

Separately, Chris Koch told Bloomberg News on Thursday that New Era had secured a $600 million refinancing loan from banks.

(Reporting by Abigail Summerville, Echo Wang and Anirban Sen in New York; Editing by David Gregorio)

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