Summary

Netshoes (Cayman) Ltd. (Pending:NETS) filed an F-1/A for its upcoming initial public offering. The company intends to sell 8.25 million shares of its common stock at a marketed price range of $18-20. It has an additional 1,237,500 shares as an overallotment option for its underwriters. The company is expected to IPO on Wednesday, April 12.

We previewed this deal on our IPO Insights platform.

The underwriters for the IPO include Goldman, Sachs & Co., J.P. Morgan, Bradesco BBI, Allen & Company LLC and Jefferies.

Assuming Netshoes prices at the midpoint of its price range, it would have a market cap $611 million and trade at a price/sales range of 1.14x.

Business overview

Based in São Paulo, Brazil, Netshoes (Cayman) Ltd. is one of the top online retailers in Latin America, and it is the top online retailer of sports and lifestyle products in the region. The company’s operations are focused in Argentina, Brazil and Mexico. Since launching in 2000, Netshoes has sold to more than 12.8 million customers. It started as a brick-and-mortar shoe store in São Paulo, but closed its brick-and-mortar operations in 2007, refocusing on online sales. Netshoes offers more than 190,000 SKUs from major brands, including Ralph Lauren, Nike, Adidas, Tommy Hilfiger and others.

(Netshoes (Cayman) Ltd.)

Executive management team overview

Marcio Kumruian is the co-founder, chairman and chief executive officer of Netshoes. He served on the boards of Netfarma and Modnet until January 2016. Kumruian holds an undergraduate degree in economics from Mackenzie University.

Financial highlights and risks

Netshoes generated revenue of $533.75 million in 2016, an increase of 33.7% from that in 2015. Gross margins have decreased from 32.8% in 2015 to 31.6% in 2016, which is slightly below average for the specialty retail industry. The company has not yet reported profits, and generated a net loss of $46.6 million in 2016. As of December 31, 2016, Netshoes had $34.1 million in cash and cash equivalents and total liabilities of $303.6 million.

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