Investment in the customer proposition, management team and platform drives value creation.
Allegro.eu (“Allegro” or “the Group”), a global top ten e-commerce platform and the leading and most recognised internet brand in Poland, completed its successful listing on the Warsaw Stock Exchange (“WSE”) today with its shares trading under the symbol “ALE”. The listing, which was executed via a placing to both institutional and retail investors, represents the largest initial public offering (“IPO”) on the WSE to date. At the IPO price of PLN 43 per share, the implied market capitalisation is PLN 44 billion (€9.8 billion).
Funds advised by Cinven, Permira and Mid Europa Partners (together “the Sponsors”) acquired Allegro.eu in January 2017 for US$3.25 billion (€2.75 billion). The value creation strategy involved investing in the experience and convenience of Allegro’s services to both consumers and merchants. Initiatives included the development of a best-in-class mobile app, improved logistics solutions and pricing tools, and the launch of Allegro SMART! – the subscription-based loyalty program whose subscriber base has grown to 2.1 million subscribers at 30 June 2020.
The impact of these initiatives, under leadership of Allegro’s Chairman Darren Houston, CEO François Nuyt and the enhanced management team recruited to the Group, has been significant. Over the lifetime of the Sponsors’ investment, GMV grew by 99%, net revenue by 102% and adjusted EBITDA by 113% on a last-twelve month (“LTM”) basis. Most recently, GMV growth increased further to 54% (LTM to 30 June 2020) as consumers turned to Allegro to provide them with goods during the ongoing COVID-19 pandemic.
In addition to the significant business growth and value creation, Allegro has seen a substantial increase in employees from 1,380 at the end of 2016 to nearly 2,300 as at 30 June 2020.
Due to the strength of investor demand the original offer of shares was up-sized, with c. 182.6 million shares sold by the Sponsors in the IPO (in aggregate), raising PLN 7.85 billion (€1.76 billion) while retaining an aggregate equity stake in the Group of c. 73% post-listing (before exercise of the over-allotment option). Should the over-allotment option be fully exercised, the Sponsors will realise a further PLN 1.38 billion (€308.72 million).
Commenting on the IPO, David Barker, Partner of Cinven said:
“When we originally invested in Allegro in 2017, it was a good business with a good reputation. We brought in a new management team, led by the highly experienced Chair, Darren Huston, and CEO, François Nuyts. Together with management and our co-shareholders, we focused on improving the experience for both customers and merchants on the platform and created the ongoing improvements evident in the operating metrics and financial performance of the business. As a result, Allegro is now a great business with an excellent reputation and has an exciting outlook for future growth.”
Richard Sanders, Partner of Permira added:
“Over the last four years, Allegro has grown from strength to strength. With a long-term growth mindset, the company has continued to make significant investments in headcount and technology to improve the consumer and merchant experience. This has spanned everyday retail basics – such as lowering prices and broadening selection – to longer-term strategic bets like Smart!, which are fundamentally transforming the quality of the online shopping experience in Poland. Today marks the next step in the company’s growth trajectory, and we are very excited to continue working with Darren, Francois and the management team.”
Paweł Padusiński, Partner and Head of Warsaw Office of Mid Europa Partners added:
“Allegro’s success story is one of the best testimonies to Mid Europa’s strategy focused on supporting the leading consumer facing businesses in Poland and Central Europe. During our investment in Allegro, we have provided our local investor perspective to the Board and, through our Warsaw based team, have worked closely with Allegro’s highly talented and motivated management. Jointly with our partners, we have helped develop Allegro into a Top 10 global e-commerce marketplace. I am very pleased that this CEE success story was recognized by so many reputable institutional and retail investors. Allegro can now start its new growth chapter as a public company, after having completed the largest ever IPO on the Warsaw Stock Exchange.”