Goldman Sachs has eyes on Bailey Nelson funding round

Tearaway eye wear group Bailey Nelson is set to front private equity funds and other growth capital investors for a funding round through Goldman Sachs.

Street Talk can reveal Bailey Nelson founders Nick Perry and Peter Winkle took pitches from a handful of investment banks in recent weeks, before tapping Goldman Sachs for the mandate.

The founders and the bankers have now started working on the narrative to present to potential investors, with the funding round pegged for later this year.

Bailey Nelson was set up as a direct-to-consumer eye wear company in 2012, sourcing spectacle frames, lenses, sunglasses and the like, and selling them to customers via its store network and online.

The company has grown to about 40 stores in Australia and its network also stretches New Zealand, Canada and the UK. It is understood to be making more than $100 million revenue a year.

The growth agenda – dozens more stores in the next few years – comes with a cost, and Bailey Nelson is keen to talk to new potential investors about chipping in to help pay for the expansion.

Framing the pitch

Its pitch is likely to include its fast growing footprint, wide product range and target market, which is supported via a strong social media presence. Its average customer is only 27 years old, and is likely to be buying glasses, contact lenses or other services for decades to come. It also has a unique corporate/partnership/franchise model, aimed at pairing up with optometrists.

Bailey Nelson’s raising plans come as a similar company in the United States, Warby Parker, tapped investors for $US245 million in a deal valuing it at $US3 billion mid last year. Warby Parker has about 120 stores in the US and two in Canada.

Bailey Nelson’s difference is its Australia roots, bigger presence in Canada and its commitment to optometry. It has optometrists in its stores, which makes it easier for customers who are after a new pair of subscription glasses or contact lenses.

Its big competitor in Australia is Luxottica Group, a global giant which owns Sunglass Hut and OPSM in Australia as well as a bunch of brands its retailers sell such as Ray-Ban, Chanel and Burberry, and Specsavers, which hails from the UK.

The mooted raising comes as another Australian retailer with global ambitions, Guzman y Gomez, attracted an $86.8 million investment from Sydney-based fund manager Magellan Financial Group, and as other Australian e-commerce plays such as Sleeping Duck and Koala Furniture have been toying with their own deals.

Source: Bloomberg BNN