Now’s your chance to buy your share in two Australian fashion icons. Global financial services firm JP Morgan have confirmed that Australian fashion brands Witchery and Mimco are moving to public ownership by listing on the Australian Stock Exchange. JP Morgan will be working on the Initial Public Offering (IPO) process for the two companies.
An IPO is the first sale of a stock to the public, and is used as a way for companies to raise finances. It is predicted that the Witchery/Mimco IPO could raise around $300 million. With this extra money comes increased responsibility; not only do public companies have more stringent reporting requirements, crucially, they assume a responsibility to shareholders - who are now part-owners of the company - to perform and make money.
With this IPO, Witchery and Mimco will join the likes of Myer, Oroton, Just Group, Pacific Brands, David Jones and Country Road, all of whom are listed on the Australian stock exchange. In Australia, not many fashion companies are listed on the stock exchange so it is difficult to predict whether there will be much demand for the stock and what the resale value will be. With Myer's stock hitting a record low of $2.77 last Tuesday, significantly lower than it's float price of $41.10 18 months ago, and David Jones' stock not fairing much better, it doesn't look like it is a great time for retailers in the stock market. It is also not clear how the introduction of Zara - direct competitors to Witchery and Mimco - into the Australian market will influence potential investors.
It will be interesting to see how Witchery and Mimco use the money they raise from this IPO. They need to be smart about future campaigns, collections and advertising if they are to compete in an increasingly competitive retail market.
Information sourced from http://www.ragtrader.com.au/news/jpmorgan-confirms-witchery-and-mimco-ipo
Images from http://witchery.com.au and http://mimco.com.au