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Rent the Runway has held preliminary discussions with bankers about a potential initial public offering, said two sources briefed on the New York City-based apparel rental firm’s plans.
The company has been sounding out advisors about market conditions in anticipation of a listing, the two sources said. Ever since Snap’s [NYSE:SNAP] listing on 2 March, the frequency in which Rent the Runway and other consumer-facing tech companies have engaged bankers has increased, they said.
Rent the Runway has not yet picked bankers but if it were to bake off in the next couple of months, an IPO in the second half of the year would be possible or it could elect to wait until 2018, the sources said.
The company generated more than USD 100m in revenue in 2016 and it is profitable on an EBITDA basis, said the first source, echoing what CEO Jennifer Hyman told Recode in a 27 December report.
Rent The Runway allows women to rent designer apparel and accessories online. In addition to one-time rentals, the company rolled out an “unlimited” service a year ago in which customers pay USD 139 a month to rent out top fashions on an ongoing basis. It also operates brick-and-mortar stores in six major US cities and it has partnered with luxury retailer Neiman Marcus to open “stores within a store.”
In December, the fashion technology startup raised USD 60m in equity financing led by Fidelity with participation from investors such as Bain Capital, Technology Crossover Ventures, Highland Capital, and Advance Publications. It has raised approximately USD 190m in private capital since it was founded in 2009.
Co-founders Jennifer Fleiss and Jennifer Hyman reportedly each own 13% stakes in the company.
Rent The Runway competes with other online apparel startups such as Le Tote and Stitch Fix.
The company did not return a message seeking comment.
by Troy Hooper in San Francisco
As seen in the mergermarket newsletter on 06/04/2017