Fashion retailer raises $120 million ahead of ASX debut

The parent company of Australian fashion brands Metalicus and Review has this week raised $120 million as it prepares to go public.

The PAS Group, which also includes brands such as Yarra Trail, Black Pepper and Marco Polo, will make its debut on the Australian Securities Exchange on June 18.

According to Fairfax, the initial public offering, which was managed by Morgan Stanley, priced the company at 8.9 times the group’s expected 2015 profits.

It’s the latest chapter in the success story of the self-proclaimed “buy and build” company, which has grown from 18 retail outlets in 2005 to more than 220 across Australia and New Zealand and now employs more than 1220 employees.

The private equity-backed group was established in 2004 and now represents 27 brands. The business also has e-commerce operations and has grown a wholesale arm, which provides house-branded products to department and discount department stores.

Retail Doctor Group chief executive Brian Walker told SmartCompany the success of the PAS Group is “a good example of the retail market consolidating and rationalising”.

“It’s getting more challenging for independent retailers unless they are super specialised, but here you have a group that acquires businesses and breaks up their branding really well,” says Walker.

“I think this shows confidence in Australian retail and fashion retail, as well as confidence in the consumer,” he says.

Walker says there are a number of examples of Australia retail groups that follow a similar portfolio model, including Specialty Fashion Group, True Alliance and Brazen.

“The costs of running standalone retail business are increasing all the time and these models reduce a lot of costs by sharing the costs across the group,” says Walker. “It’s all about economies of scale.”

“They also have a good understanding of their consumers and segment their brands accordingly. From the consumer point of view, brands such as Metalicus and Yarra Trail are very independent but from the internal company view, the backend processes are all shared,” he says.

Walker says these portfolio businesses are attractive to investors because the stronger brands can help support brands in the group that may run into trouble.  

In the case of the PAS Group, Walker says the risk to investors is mitigated even further across the group’s retail, wholesale and e-commerce businesses.