Michael Kors Raises $944 Million in IPO Launch

In Industry News, What's New by Accessories StaffLeave a Comment

A jubilant Michael Kors at the New York Stock Exchange

New York—Designer Michael Kors, John Idol, chairman/ceo of Michael Kors Holdings, Silas Chou, a director, and Lawrence Stoll, Kors’ executive vice president/chief financial officer, were all smiles this morning when they rang the opening bell at the New York Stock Exchange.

And for good reason.

Their Hong Kong-based company raised $944 million  from the 47.2 million shares it offered as part of its initial public offering. But due to a surge in investor interest, Kors Holdings (KORS) added an additional 6,325,000 shares on Wednesday, bringing the company’s total initial public offering to 54,280,000 shares.

Better still, in early trading today, the company’s shares rose as much as 25%. Originally the company projected its shares to price out at $17 to $19, but due to an upsurge in interest from investors, the shares were offered at $20 each. Analysts said earlier today that given the current trading levels, Michael Kors Holdings would have a market valuation of about $4.75 million.

Kors Holdings: ‘This Was on Everyone’s Buy List’

More than $1 billion will be raised if the company’s underwriters exercise over-allotment options to buy additional shares to satisfy investor demand.

While investors generally have been highly selective in their IPO choices, Kors Holdings has had exceptional interest due to the company’s continued sales success and potential for future growth.

Kors Holdings net income soared 84.7% during its fiscal 2011, from $72.5 million from $39.2 million. Its half year sales through Oct 1. were $548.7 million, up from $340.9 million a year earlier. Kors Holdings has expanded its own direct retail outlets and now operats184 North American stores and shops within department stores as of Nov. 26, and 37 in Europe and Japan, according to the company’s prospectus.

“You have to separate the overall market environment from a company like Michael Kors that is in a very strong growth period,” said Linda Killian, principal at Renaissance Capital, an IPO-focused investment firm. “Investors want to own a company like this, irrespective of what is going on in the market.”

“The IPO market has not shown grandiose returns, but this was on everyone’s buy list,” said Scott Sweet, a senior managing partner at IPOBoutique.com.

Michael Kors, who also serves as judge on TV show “Project Runway,” could walk away with some $137 million from the IPO, analysts said. That’s in addition to the value of his 8.1% share which is worth $374 million at current trading. Lance LePere, Kors’ new husband, could realize nearly $2 million before taxes and holds shares worth about $10 million.

But Chou and Stoll, who own 35.5% of the company, stand to become billionaires, Forbes reported. “As Chou and Stroll each own 50% of Sportswear Holdings, it appears that their Michael Kors participation has made both men billionaires for the time being, with approximately $1.05 billion apiece in cash and equity stemming from the Kors deal alone.”