Sources: Douglas plans to list in the first quarter of 2024

German perfume retailer Douglas is eyeing an IPO in the first quarter of this year, sources cited by Reuters said, in what could be one of the first major tests for European initial public offerings (IPOs) in 2024.

The private equity-backed company is expected to announce its Christmas season earnings in the coming weeks, with a view to listing on the Frankfurt Stock Exchange by March, market conditions permitting, the sources said.

The listing will give the retailer owned by investment fund CVC Capital Partners a valuation of up to 7 billion euros ($7.65 billion), one of the sources said.

The final decision on the timing of the listing has not been made and the IPO plan could be delayed, the sources warned.

Douglas officials declined to comment on the information published by Reuters.

The proceeds from the IPO will be used to pay down debt, according to the sources. The company had net debt of 3.4 billion euros at the end of September 2023, including store leases, equivalent to about 4.7 times adjusted core earnings, according to Reuters.

Under new CEO Sander van der Laan, Douglas posted a 12% increase in sales to more than euro4 billion in the year ending September 2023, with adjusted earnings before acquisitions, taxes, depreciation and amortization (EBITDA) of approximately 726 million euros.

The company's listing would come after two years with few initial public offerings due to rising debt costs and geopolitical uncertainty, which have dented confidence in new stock listings.

Last year was the worst since 2009 for IPOs worldwide, with $120 billion raised, according to Dealogic data.

However, bankers involved in IPO activity ended 2023 on a positive note, with the US Federal Reserve (central bank) signaling that it may start cutting interest rates in the new year, which would be a boost to new listings .

In addition to Douglas, bankers hope other European companies will come to market this year and pave the way for a resurgence in deals. Renault's electric vehicle division, Ampere, and Swiss skin care group Galderma are thus expected on the stock market.