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Zalando Worth $6.8 Billion After Pricing IPO At More Than $27 A Share

This article is more than 9 years old.

Zalando, Europe's largest online-only fashion retailer priced shares on Monday at $27.28 (21.50 Euros) in its initial public offering, valuing itself at $6.8 billion (5.3 billion Euros) according to sources.

At that price, the Berlin company raised at least $668 million (526 million Euros) in the largest Germany tech public offering since the 2000 listing of Deutsche Telekom. According to its IPO prospectus, Zalando expects to start trading on the Frankfurt stock exchange on Wednesday, Oct. 1.

After experiencing strong demand from investors, Zalando priced shares at the higher end of its expected range of $22.86 (18 Euros) to $28.54 (22.50 Euros) per share. The company sold at least 24.5 million shares to underwriters, who also have the option to purchase an additional 3.7 million shares in an 0ver-allotment agreement. If the over-allotment option is exercised in full, Zalando could raise up to $768 million (605 million Euros.)

Zalando's debut comes during a time of global exuberance for e-commerce IPOs, highlighted earlier this month by the record-setting, $25 billion public offering of China's Alibaba Group. Later this week, the European fashion retailer will also be followed onto the public market by Berlin startup incubator Rocket Internet, which launched and funded Zalando back in 2008. Rocket Internet's IPO could eclipse Zalando's and raise up to $2 billion (1.6 billion euros.)

A source familiar with Zalando's plans said that the company did not price at the very top of its expected range because leaders at the fashion retailer see the current technology stock market as "overheated." The company is wary that pricing too high could eliminate any first day trading pop, said the source, who also noted that Zalando's decision-making was affected by Rocket's looming trading debut, which could happen as early as Thursday.

Founded in 2008 by Robert Gentz and David Schneider, Zalando developed under the watch of Rocket Internet, which has maintained a reputation for copying American technology companies in overseas markets. Zalando’s early critics noted that the company was a European clone of U.S. retailer Zappos, which at the time of Zalando’s founding, had cornered the American online shoe market and was approaching $1 billion in revenue.

Last year the company, which was the fastest-ever on the European continent to hit $1 billion in annual revenue, posted net sales of about $2.3 billion. In August, Zalando announced revenues of $1.4 billion in the first half of 2014 with net income of $16.6 million, an improvement from the more than $90 million net loss during the same period in 2013. On its current track, the retailer, which operates in 15 different European countries, may have the first profitable year in its history. Today, the company is overseen by a management board consisting of Gentz, Schneider and their former classmate, Rubin Ritter.

Zalando’s current shareholders include Yuri Milner’s DST Europe; Holtzbrinck Ventures; Rocket Internet cofounders, the Samwer brothers; Danish fashion billionaire Anders Holch Povlsen; and Kinnevik, which is the largest stakeholder with a pre-IPO 36% stake. None of those shareholders sold stock in the IPO.

Zalando will list on the prime standard segment of the Frankfurt Stock Exchange under the symbol “ZAL.” The lead underwriters on the offering include Morgan Stanley , Goldman Sachs and Credit Suisse, while Deutsche Bank and JPMorgan Chase are joint bookrunners.

Follow me on Twitter at @RMac18 or email me at rmac@forbes.com.