As we had previously reported, the shareholders of Alain Afflelou were considering several options to cash out of the company and to provide it with new financial means for its international expansion (Eyewear Intelligence vol. 17 N° 9, July 4, 2016). In the end, they have decided to raise more equity and to offer shares on the Euronext stock exchange in Paris.

In a first stage, the leading French optical retail franchising group is planning to issue new shares worth about €200 million. In a second stage, shares would be offered to the general public by the three institutional investors that currently control the company – Apax Partners, Lion Capital and a Canadian equity fund. After these transactions, between 40 and 50 percent of the company's shares will be traded publicly.

Stock market authorities have yet to approve a formal application made a few days ago by Alain Afflelou for a listing on Euronext. No details have yet been given about the desired valuation of the company or the date of the initial public offering, but it will probably take place toward the end of this year or in early 2017, even though the company has three more years to go to reimburse a €400 million bond issue.

The group comprises about 1,400 stores in 13 countries, and 87 percent of them are franchises. The retail network includes 900+ stores in France and around 370 in Spain. As the average Alain Afflelou store generates between 2.5 and three times more sales than a regular independent, thanks in part to massive advertising expenses, franchisees pay a fee of 4 percent of their turnover.

As previously reported, Alain Afflelou has just opened a franchised store in Chile and is about to open its first stores in China, also on a franchising basis. It wants to push the turnover generated outside France from 35 percent to more than 50 percent in the next five years, expanding especially in countries such as Belgium, Switzerland and Portugal – organically and through acquisitions.

The group is targeting an operating profit (Ebit) of €70 million and retail sales of between €745 million and €760 million in the current financial year ending in July 2017. For the year ended last July 30, Alain Afflelou reports an adjusted operating profit of €66 million, up by 20.1 percent from the previous financial year. That amounts to an Ebit margin of 19 percent on its net revenues, which grew by 11.1 percent to €346 million. Retail sales increased by 7.6 percent to €693 million, with an increase of 3.4 percent on a same-store basis.

Going forward, the management is confident that its sales will grow by 7 and 9 percent per year and that its operating results will increase by between 8 and 10 percent annually.

Founded in 1972 in Bordeaux by the eponymous French optician, Alain Afflelou was already quoted on the stock exchange between 2002 and 2008. It was subsequently purchased by Bridgepoint Capital and Apax Partners.

It tried to go public again in 2012 before the investment made by Lion Capital, which currently owns 39 percent of its equity. The Canadian fund, called Caisse de Dépôt et Placement du Québec, owns 29 percent of the shares. Apax still holds a 14 percent stake. The founder of the group and his family own 13 percent of the shares. Eight percent of the equity is in the hands of Alain Afflelou's chief executive, Frédéric Poux, and other members of the management.