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

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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 Acquire Licensing Rights

NEW YORK, Sept 7 (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.

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

Our Standards: The Thomson Reuters Trust Principles.

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Abigail is on the M&A team and writes about consumer and retail deals. She joined Reuters in 2022 from Debtwire where she covered leveraged finance and the primary debt market for three years. Previously, her work has appeared in the Wall Street Journal, CNBC and the Boston Business Journal. She majored in business journalism at Washington and Lee University. Contact: 332-261-5948

Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters’ Reporter of the Year in 2020.
Contact: +9172873971

Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media.
Contact:+1 (646) 705 9409

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