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Wilson Racket Maker Seeks $1.8 B in US IPO

Amer Sports Files for US IPO to Raise $1.8B

Source and Citation: News article published by Bloomberg on January 23, 2024

Layman’s Analysis

Amer Sports, previously taken private in 2019, plans to go public again, with the IPO price range set at $16-$18 per share, valuing the company at up to $8.7 billion pre-money. Strong growth prospects in China are evident, with commitments from investors such as Anta, Tencent, and billionaire Chip Wilson to invest $510 million in the IPO.

Wilson Racket Maker Seeks $1.8 B in US IPO

Impact on Retail Investors

For Indian retail investors, the indirect influence of this IPO lies in its potential to revive investor appetite for new listings in 2024. A successful IPO could encourage more companies to tap into public markets. While Amer Sports may not list directly in India, its business approach and growth plans may serve as a template for Indian firms targeting global opportunities in the discretionary sector.

Retail investors should monitor the post-IPO stock performance of Indian sports goods companies, such as Cosco India, Galaxy Cloud Kitchens, and Campus Activewear, to gauge the impact on the market. The success or failure of Amer Sports post-IPO may highlight risks in the cyclical domain of sporting goods.

Impact on Industries

Amer’s premium positioning across various sports makes it less direct competition for affordable Indian sports goods brands. However, its digital and China blueprint can be adopted by Indian companies. Listed firms like Cosco India, Campus Activewear, and Galaxy Cloud Kitchens could learn from Amer’s strategies to enhance their market presence.

Listed Firms Considered:

  • Cosco India
  • Campus Activewear
  • Galaxy Cloud Kitchens

Long-Term Benefits & Negatives

Long-Term Positives

  • Mainstreams niche sports categories in India through digital and lifestyle positioning.
  • Encourages a health and fitness culture, benefiting the wider retail ecosystem.
  • Opens up global acquisition opportunities for cash-rich Indian conglomerates.

Potential Long-Term Negatives

  • Premium pricing could limit the market size to upper-class Indians.
  • Retail landscape may become overcrowded with profit-driven brands.
  • Celebrity endorsements and promotional costs may increase overhead costs.

Short-Term Benefits & Negatives

Short-Term Positives

  • Revives risk appetite for IPOs in 2024.
  • Brings the spotlight on sports retail, benefiting affiliated sectors.
  • Signals rising global wealth willing to spend more on health and fitness.

Short-Term Negatives

  • Luxury positioning may not address mass market needs.
  • IPO distraction for Anta could impact partnerships with Indian companies.
  • Unlikely to immediately influence FDI flows or strategic tie-ups with Indian sporting goods brands.

In conclusion, the impact of Amer Sports’ IPO on Indian sports retail firms may be limited initially, with the focus on indirectly reviving the funding environment and highlighting the category.

Market Impact of Amer Sports IPO: Potential Gainers and Losers

Indian Companies:

Gainers:

  • Decathlon: Increased interest in the sporting goods market due to Amer Sports’ IPO could stimulate demand for Decathlon’s affordable offerings, potentially boosting sales and brand recognition.
  • Bata India: Amer Sports’ focus on premium brands might create a gap in the mid-range market, which Bata India could capitalize on with its value-driven footwear and apparel.
  • Kitex Garments: As Amer Sports targets premium outdoor gear, Kitex’s focus on sustainable and ethical outdoor apparel could attract consumers seeking alternatives to mainstream brands.

Losers:

  • NIVIA (NIVICO Holding Ltd.): Increased competition from Amer Sports’ brands like Wilson and Atomic could put pressure on NIVIA’s market share in badminton and winter sports equipment.
  • BSE Infrastructure Products Ltd.: Amer Sports’ entry into the Indian market could potentially impact demand for BSE’s sporting goods manufacturing services, though this might be mitigated by potential partnerships.

Global Companies:

Gainers:

  • Adidas AG: Amer Sports’ focus on outdoor and winter sports might benefit Adidas by freeing up market share in other areas like basketball and running shoes.
  • Nike Inc.: Increased investor interest in the sporting goods sector due to Amer Sports’ IPO could indirectly benefit Nike through improved market sentiment.
  • Skechers USA Inc.: If Amer Sports focuses heavily on premium brands, Skechers might benefit from capturing increased demand for mid-range athletic footwear.

Losers:

  • Puma SE: Increased competition from Amer Sports’ Arc’teryx brand could pose a challenge to Puma’s outdoor apparel market share.
  • Under Armour Inc.: Amer Sports’ potential success in winter sports could divert consumer attention away from Under Armour’s winter gear offerings.
  • Smaller sporting goods companies: Amer Sports’ IPO could overshadow smaller brands and make it harder for them to attract investor attention and funding.

Market Sentiment:

  • Overall, the Amer Sports IPO is likely to generate positive sentiment in the sporting goods sector, potentially boosting share prices across the industry.
  • However, individual companies will be affected differently based on their specific product lines, target markets, and competitive positioning.
  • Investor focus will be on Amer Sports’ execution, growth prospects, and potential impact on existing players in the market.

Please note: This analysis is based on the provided information and is not intended to be financial advice. Investors should conduct their own due diligence before making any investment decisions.

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