KKR's Academy Sports confidentially files for IPO: sources

[NEW YORK] KKR & Co's sporting goods retailer Academy Sports + Outdoors has confidentially filed paperwork for an initial public offering (IPO) that could happen as soon as this year, according to people with knowledge of the matter.

The company is working with Credit Suisse Group and KKR Capital Markets on the potential public listing, said the people, who asked not to be identified because the talks are private. Other banks may soon be added to the lineup, one of the people said. As with any company that explores an IPO, it may also field takeover interest.

Academy's earnings before interest, taxes, depreciation and amortisation for the 12 months ended May 2 were US$361 million, according to a person with knowledge of the matter. At a similar multiple to publicly traded rival Dick's Sporting Goods, the company could be valued US$2.5 billion or more.

Representatives for KKR and Credit Suisse declined to comment. Academy Sports didn't immediately respond to a request for comment.

Since 2017, the Securities and Exchange Commission has allowed all companies to file early IPO paperwork without having to make the details public.

KKR has owned Katy, Texas-based Academy Sports since 2011, growing revenue to more than US$4.9 billion from US$2.7 billion in 2010, according to the company's website and a statement announcing the deal.

Academy Sports traces its roots to a single tyre shop, which opened in San Antonio in 1938. Under KKR's ownership the store footprint has grown to more than 250 stores in 16 states across the South and Midwest of the US, up from 133 stores.

In April, Moody's Investors Service downgraded Academy's rating deeper into junk territory to reflect "expectations that the company's approaching July 2022 term loan maturity, high leverage and expected Covid-19-driven earnings declines in 2020 would increase the likelihood of a transaction that Moody's could view as a default".

Academy Sports's term loan - with about US$1.5 billion outstanding due in 2022 - last traded around 91 US cents on the dollar, rebounding off a low of about 55 US cents on the dollar in March.

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