Tumi Holdings Inc. (TUMI:US), the premium travel-bag company, is seeking as much as $319.3 million in a U.S. initial public offering, allowing private-equity owner Doughty Hanson & Co. to begin recouping its investment.
The company, London-based Doughty Hanson and other stockholders are offering 18.78 million shares at $15 to $17 each, according to a regulatory filing today. That would imply a market value of as much as $1.15 billion.
Demand for luxury goods is helping Doughty Hanson reduce its stake in Tumi, which it bought for $276 million eight years ago, longer than buyout firms typically hold investments. Tumi, whose backpacks retail for up to $595, is seeking a valuation of as much as 3.5 times 2011 sales, compared with the median of 0.6 times for a basket of peers, according to data compiled by Bloomberg.
“The continued strength of the luxury sector, along with new highs in the equities markets, will motivate more high- performing luxury brands to go public,” Michael Appel, a director at consulting firm AlixPartners LLP in New York, said in an e-mail.
Tumi plans to use its proceeds from the offering to repurchase outstanding stock from Doughty Hanson, according to the filing. The European private-equity firm, co-founded in 1985 by Richard Hanson, paid an average of $1.04 a share for Tumi’s stock, the filing shows. Using that price, an IPO at the midpoint of $16 a share would represent a 1,400 percent return for shareholders, according to data compiled by Bloomberg.
Tumi is offering 17.56 million shares, while stockholders including Doughty Hanson, Atlantic Capital Group LLC and HVB Capital Partners AG are offering 1.22 million, according to the filing. The number of shares on offer by those investors may vary depending on the price Tumi can obtain. Co-founder Hanson will hold about 61 percent of Tumi’s shares following the offering, the filing shows.
Doughty Hanson’s eight-year hold on Tumi is almost twice the median holding period for companies that buyout firms took public or sold last year, according to Seattle-based researcher PitchBook Data Inc. The median holding period was 4.81 years, or 25 percent higher than before the 2008 financial crisis, as sagging markets hurt companies’ valuations and turned away potential investors.
The IPO follows the successful offering of luxury-goods maker Michael Kors Holdings Ltd. (KORS:US) in December and a share sale by its biggest rival, Samsonite International SA, last year. Tumi, known for its high-priced, black-nylon travel goods, sells items such as $895 expandable carry-ons through about 1,600 locations worldwide.
“The offering is an opportunity for investors to buy into an authentic and premium brand,” Jeffry Aronsson, chairman of Aronsson Group LLC in New York, which helps develop fashion labels, said in an e-mail. “Tumi is synonymous for utility and durability in luggage and business cases.”
Monthly sales at U.S. luxury stores open at least a year rose an average 7.9 percent in the first two months of fiscal 2012, compared with the year-ago period, according to the International Council of Shopping Centers. The monthly average of all retail segments it tracks is up 4.6 percent, the New York-based trade group said April 5.
Michael Kors sold $944 million worth of shares at $20 apiece in mid-December. The shares have more than doubled since. Samsonite, the world’s largest branded-luggage maker, sold its shares to the public in a Hong Kong IPO in June. Samsonite, looking to spend at least $1 billion on buying rivals, said in January that an acquisition of Tumi would be a “natural fit.”
Tumi is one of at least four companies to set terms for U.S. IPOs today. Software maker Splunk Inc. is seeking as much as $135 million in its offering, while Infoblox Inc. (BLOX:US), a network and data-services provider, plans to raise as much as $105 million. Tumi’s IPO is expected to price on April 19, data compiled by Bloomberg show.
Tumi, based in South Plainfield, New Jersey, plans to list shares on the New York Stock Exchange under the symbol TUMI. Goldman Sachs Group Inc., Credit Suisse Group AG and JPMorgan Chase & Co. (JPM:US) are managing the offering.
The luggage maker’s sales increased 31 percent to $330 million last year, while net income surged to $16.6 million from $104,000 in the same period, according to today’s filing. The company turned a profit for the first time in 2010 since at least 2007, the filing shows.
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