The IPO of Adika, controlled by the Golf & Co. (TASE:GOLF) group, is getting underway. Adika last Thursday published an initial draft prospectus for it, and the company will commence its roadshow this week.
The Adika website, founded in January 2012 by CEO Dedy Shwartzberg and Adi Ronen, is regarded as one of Israel's leading websites in online fashion sales, with 30,000 hits a day and sales of clothing, footwear, and accessories at relatively attractive prices. Adika currently has 150 employees.
Golf acquired Adika in January 2015 in an estimated NIS 40 million deal. Its value is estimated according to its situation in 2014, when its revenue totaled NIS 23 million.
According to figures published last week by Golf, Adika's EBITDA totaled NIS 12.5-13.5 million in 2015, and is projected to grow to NIS 16-17 million in three or four years.
The company is listed in Golf's books at a value of NIS 99 million, and is valued for the offering at NIS 200 million. At the same time, as has been happening with all recent equity offerings, the capital market will not be surprised if the IPO takes place at a company value of NIS 150-160 million.
The company's prospectus indicates that Adika is trying to raise NIS 25-30 million, while Golf and nine other shareholders, including Shwartzberg, Zvi Alon, Asaf Zmirly, and others, will sell shares for NIS 25 million. Before the offering, Golf owns 75% of the company's shares and Shwartzberg 10%.
The prospectus also shows that the Adika website had 83,000 active customers as of the end of September 2017, compared with 55,000 at the end of September 2016. The average purchase by a customer on the site is NIS 220.
The company's revenue totaled NIS 54 million in the first nine months of 2017, and is projected to reach NIS 65-67 million for all of 2017, 72% more than in 2016.
Adika opened a regular physical store in Dizengoff Center in Tel Aviv last March at an investment of NIS 2.5 million. The store was opened in a location that previously housed a large Golf store covering three floors and occuping 400 square meters of space, which moved to a smaller location on the bottom floor.
Golf will have to decide by April 2018 whether to continue its agreement with Adika's founders, headed by Shwartzberg, or to sever their business relations in accordance with the agreements.
Golf will probably wish to continue the agreement, with the IPO providing a way of keeping Shwartzberg in Golf by giving him a share.
Like the rest of the sector, Golf is facing strong competition and high rents amounting to 16% of its activity, a rise in the minimum wage, and international competitors, together with websites with strong sales in Israel, such as Asus and Next.
Golf, controlled by Len Blavatnik's Clal Industries and Investments, is active in two sectors: clothing fashions through the Golf chains, Polgat, and Intima; and interior design, including children's fashions and women's lingerie.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 18, 2018
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