Luxury E-tailer Farfetch’s IPO Receives Premium Price

In a global endorsement of the luxury market and e-commerce’s role in growing it, investors splurged big on the initial public offering of Farfetch, a high-end e-tailer.

Overnight in London, a group of underwriters led by Goldman Sachs, JP Morgan and UBS took the company public at a per-share price above both its initial expectations of $14 to $16 a share and a later reprice. The company went public at $20 a share, valuing its IPO above its target at more than $885 million.

The company, fueled by investments from tech giant JD.com and Artemis, focuses on a younger demographic and emerging markets like China, apparently creating an air of fresh opportunity around it for global investors. The success of its IPO essentially prices a company in the fashion business with the hype of a high-tech multiple and has implications for the entire retailing industry.

With this new capitalization, Farfetch CEO and founder José Neves, who retains a controlling stake in the company, can afford to invest in new technology and to acquire rivals.

The new injection of capital sets up Farfetch well against similar rivals like Secoo and could pose a threat to even the much larger Alibaba, which has a massively broader base and hundreds of millions of more customers but started its Tmall luxury pavilion division years after Farfetch launched.

Farfetch has yet to record a profit in its 10 years of operation, but that appeared to have little impact on investors’ appetite to buy into the company. Farfetch will trade on the New York Stock Exchange under the symbol FTCH.

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E-Commerce