Polish e-commerce platform Allegro goes public con brio

No avid online shopper would deny the popularity of eBay and Amazon worldwide, however the Polish e-commerce market is a different story. Here the scene is undoubtedly dominated by Allegro. The platform was founded in 1999 in Poznań, western Poland, and to date has offices in other major Polish cities such as the capital Warsaw, Toruń, Wrocław, and Kraków.

Initially born as a website allowing to sell items in auction, Allegro has developed into an e-commerce platform allowing both wholesalers business and private individuals to use its services for selling goods. Allegro has transitioned into a de facto e-commerce platform even offering shipments options similar to Amazon Prime; buyers on Allegro can subscribe to its Smart! Service and by paying a fixed monthly fee can be partially covered for delivery costs that are supported by Allegro Smart! 

According to US-based analytics service website SimilarWeb, as of February 2020 the platform was the sole European-only player to make it to the top 10 e-commerce sites worldwide, totalling 194m visits on a monthly basis. It has been estimated that to date Allegro has over 20m users, employs about 2,000 employees in five Polish cities and, unsurprisingly, comes as the most popular e-commerce site in Poland, with 79.0% of consumers using it, and accounting for over 30.0% of online retail in the country. In December 2019, its success even triggered investigations by the Office of Competition and Consumer Protection (UOKiK), Poland’s consumer watchdog, amidst concerns that the platform had violated antitrust law by favouring its online shop compared to other sellers.

To date, it is owned by private investment fund Cinven, global investment firm Permira and Central and Eastern European investment-focused independent private equity player Mid Europa, that bought the business in 2016, from South Africa’s Naspers. At the time, there were voices that Alibaba Group and eBay were also interested in Allegro, but several others private funds were fighting to take over the website, and three of them eventually succeeded. 

Recently, in June 2020 the company’s owners have announced plans to list the auction website on the Warsaw Stock Exchange in September, planning an Initial Public Offering whose aim is to sell shares of up to €2.6bn, valuing the company at around €9.6bn (PLN43bn). According to sources, Goldman Sachs and Morgan Stanley will also be involved in the transaction as action coordinators, and Lazard Ltd. will be responsible for preparing the transaction.

Any deal would make Allegro the largest-listed company on the Polish stock exchange according to sources. Furthermore, Allegro’s listing would represent a boost for the European IPO market, which has reportedly had the slowest growth since 2012 having raised just about €4.9bn in H1 2020. The move is quite unsurprising, as Allegro prides itself of a solid balance sheet and continuous growth; in 2019, its revenues were up 31.0% to €0.5bn (PLN2.3bn) and the company’s EBITDA increased by 18.0% year-on-year to €0.3bn (PLN1.21bn). Furthermore, the Covid-19 tail-wind effect on the e-commerce market worldwide has also seen more business coming online, and around 15,000 new sellers signing up to Allegro in the weeks around the end of June according to Chief Commercial Officer Damian Zaplata. Following on the footsteps of Amazon or Alibaba, Allegro has also recently announced the deployment of Allegro Pay, its own payment method with might be seen on its platform starting from July 31, 2020 and might be implemented to replace payment technology for online merchants PayU.

The size of the IPO deal, Allegro’s financial health and its continuous platform’s development as well as its growing scale, appetising in the post-COVID-19 world, might attract many investors, and see Allegro gain further traction and market shares not only in the European market but, potentially, also beyond.

Source: Transport Intelligence, July 21, 2020

Author: Caterina Ciccone