Koala locks in cornerstone investors for IPO
Online furniture retailer Koala is poised to become the first IPO of 2026, with cornerstone investors locked in and a term sheet expected to land with fund managers on Monday. The listing enters a volatile market, with the US-Iran conflict rattling global equities and stalling what was expected to be the busiest post-earnings IPO season on the ASX in half a decade.
Transaction snapshot
Deal value: $300 million market capitalisation; raising $68 million in new capital with a total offer size of approximately $100 million (including secondary selldown)
Deal multiples: ~0.9x FY26F revenue; ~12.0x FY26F EBITDA (based on forecast revenue of $330 million and EBITDA of $25 million)
Deal type: Initial public offering
The bulk of the $68 million raise will be used to pay down debt and clean up the balance sheet. Co-founder and CEO Dany Milham is retaining his entire shareholding. Of the existing shareholders given the opportunity to sell, only Perennial Partners and co-founder Mitch Taylor elected to participate in the selldown. Taylor retains a shareholding, and both he and Milham have signed up to escrow arrangements.
Koala's IPO forecasts point to $330 million in revenue for FY26, representing 20 per cent growth on the prior year. Forecast EBITDA of $25 million represents a 111 per cent increase year-on-year. In FY25, the business delivered $277 million in revenue (up 42 per cent) and $12 million in EBITDA (up more than 200 per cent). US sales contributed $47 million over that period.
The company has been circling a listing for at least four years. It revamped its leadership team, expanded beyond its core mattress-in-a-box offering, and recovered from a revenue growth slump around FY22 as post-pandemic demand for home goods softened. An IPO attempt in mid-2025 was pulled after Trump threatened tariffs of up to 145 per cent on Chinese imports. The US is a key market for Koala, and China was a major manufacturing base.
Koala restarted the IPO process after Australia Day, telling fund managers it had spent six months diversifying its supply chain across South-East Asia. It also reported that the December half was its strongest ever, posting record revenue and earnings for any six-month period.
The tariff picture has shifted. The US Supreme Court struck down Trump's "Liberation Day" tariffs on 20 February, though the administration has flagged a new 15 per cent import tax under different legislation.
However, the broader market backdrop has deteriorated sharply since the US-Iran conflict started on 28 February. The geopolitical uncertainty has effectively frozen the IPO pipeline. As of 5 March, body piercing chain SkinKandy was the only candidate actively on the road, despite a long list of expected March launches including Koala, Greencross (TPG), Firmus (Blackstone-backed), Amart (Quadrant Private Equity), and Estia Health (Bain Capital). ECM bankers are reportedly advising clients to wait a few weeks until equity markets settle. SkinKandy's advisers have fund managers visiting stores but have not yet provided pricing or bookbuild timing, after initial guidance pointed to a circa $200 million raise at a $400 million-plus valuation.
One stock-specific headwind is listed peer Temple & Webster, whose share price has halved over the past year. Koala has sought to differentiate by emphasising a more clearly defined product range and healthier margins.
