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Street One owner prepares German fashion group for IPO, say sources-Reuters

(Reuters) – German women’s fashion group CBR [EQTEC.UL], known for its Street One and Cecil brands, has been earmarked for sale by its private equity owner EQT this year in a potential 1.2 billion euro ($1.3 billion) deal, two people familiar with the matter said.

The Swedish buyout group has started a process of selecting banks to help it organize a stock market listing or sale as early as the second half of the year, they added.

EQT declined to comment.

“An IPO (initial public offering) is the favored option, but if someone were to offer a good price EQT would not turn them down,” one of the sources said.
CBR expects to post 2015 earnings before interest, tax, depreciation and amortization (EBITDA) of roughly 100 million euros this year and earnings before interest and tax (EBIT) of 90 million.

“CBR may fetch an EBIT multiple of up to 13,” one of the sources said. At this valuation, the company would be sold for 1.17 billion euros.
Fashion retail groups such as H&M (HMb.ST), Inditex (ITX.MC), Next (NXT.L), Marks and Spencer (MKS.L), Fast Retailing (9983.T) and Esprit (0330.HK) trade at an average of 11.5 times their expected EBITDA.

EQT bought CBR from buyout groups Apax and Cinven in 2007 for roughly 1.5 billion euros. At the time, net debt stood at 1.2 billion euros, which has been reduced to 500 million.

Last year, CBR made roughly 600 million euros of sales of the shirts, trousers and scarves of the Street One brand targeting younger women and of the Cecil brand with its focus of more mature women. It has 8,100 points of sale.

EQT is joining a raft of private equity groups seeking to take advantage of surging stock markets to exit investments made before the financial crisis.
Apax last month took online car marketplace Auto Trader (AUTOA.L) public, and CVC in February sold a stake in Sunrise (SRCG.S) via the stock exchange. Several others are preparing similar steps.

In parallel to preparing an IPO, EQT will shop the asset to other private equity investors as well as fashion groups that are willing to expand via acquisitions.

Japan’s Fast Retailing, with its Uniqlo chain, has been scooping up a swathe of assets over the past decade and Denmark-based fashion house Bestseller A/S is also seen as by industry experts as a potential buyer.