DESENIO INTENDS TO CARRY OUT A PRIVATE PLACEMENT AND SUBSEQUENT LISTING OF ITS SHARES ON NASDAQ FIRST NORTH GROWTH MARKET

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Desenio Group AB (publ) (“Desenio” or the “Company”), a fast growing online-based direct-to-consumer (“DTC”) company within the global market for affordable wall art, hereby announces its intention to carry out a private placement of shares in the Company directed to Swedish and international qualified investors (the “Private Placement”). Following the Private Placement, the Company intends to list its shares on Nasdaq First North Growth Market in Stockholm (the “Listing”).

The board of directors and the senior management of Desenio, together with the Company’s principal shareholder Verdane¹ (the “Principal Shareholder”), consider the Listing a logical and important step in the Company’s development. Accordingly, the Company has applied for a listing of the Company’s shares on Nasdaq First North Growth Market in Stockholm. The Listing is expected to support Desenio’s future growth and operational strategy, among other things, through improved access to the capital markets, including the possibility to reach new Swedish and international shareholders. The Principal Shareholder intends to diversify the ownership of shares in the Company through a sale of existing shares by the Principal Shareholder and certain other shareholders (the “Selling Shareholders”)² directed to Swedish and international qualified investors.

The Private Placement in brief:

• The Private Placement is expected to be conducted through a sale of existing shares offered by the Selling Shareholders.
• Certain cornerstone investors, comprising funds managed and advised by Capital Research Global Investors, funds managed and advised by Capital World Investors, Cliens Kapitalförvaltning, DNB Asset Management, funds managed by Fidelity International, Handelsbanken Fonder, Kuvari Partners LLP, Lannebo Fonder and Ophir Asset Management Pty Ltd have, subject to certain conditions, undertaken to acquire shares in the Private Placement for an amount of approximately SEK 3.2 billion based on a valuation of up to approximately SEK 11.0 billion³.
• The Private Placement will be solely directed to Swedish and international qualified investors (i.e. there will be no offering to the general public in Sweden prior to the Listing).
• The Private Placement will be executed through a bookbuilding procedure.
• Subject to receiving relevant approvals from Nasdaq Stockholm, as well as prevailing equity capital market conditions, the Listing is expected to be completed during the first quarter 2021.
• In connection with the Listing, the Company, its board of directors, senior management and the Selling Shareholders are expected to agree to customary lock-up arrangements.
• Further announcements relating to the Private Placement and the Listing will be made in due course.
   

Fredrik Palm, CEO of Desenio, comments:

“From only being present in the Nordics some five years ago, we have successfully scaled our strong value proposition and DTC model throughout Europe and beyond. Despite our strong profitable growth to date, we are still only scratching the surface. We are excited to enter the next chapter of our growth journey and take this step towards being a listed company.”
 

Alexander Hars, Chairman of the board of Desenio, comments:

“I am delighted to work with Desenio’s management team and skilled employees to create an online category champion. With a clear strategy for continued profitable growth, we are excited to broaden the ownership base and enable an enlarged group of shareholders to follow us into the exciting future of the Company on its path to democratise affordable wall art."
 

Henrik Aspén, Partner at Verdane, comments:

“We are proud to take the next step in Desenio’s growth journey through this planned listing on Nasdaq First North Growth Market. Since we partnered in 2016, The Company’s unique value proposition and exceptional team have creatively disrupted the interior design market in more than 30 markets, building on a proud Scandinavian design heritage. As the largest owner, we remain committed to continue empowering the Desenio team to deliver on the Company’s potential to the benefit of design lovers everywhere.”

About Desenio

Desenio is a Swedish, fast growing digital DTC company with a leading position as an online based provider of affordable wall art in Europe. The Company offers its customers a unique and curated assortment of over 6,000 affordable designs as well as frames and accessories in 35 countries via 20 local websites. The Company currently has established websites in Australia, Belgium, Denmark, Sweden, Germany, USA, Finland, France, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Switzerland, Slovakia, Spain, United Kingdom, Czech Republic and Austria. In 2020, more than 75% of sales were generated outside the Nordic region.

Desenio’s data-driven creative process enables the Company to offer a unique range of self-produced designs that combine a high trend factor with commercial appeal to customers all over the world. The Company strives to offer a seamless shopping experience with a high level of service, a reliable and inspiring user experience, and fast deliveries at an attractive price. The Company’s view is that Desenio’s brand is the leading name in affordable wall art in Europe and the ambition is, as a first step, to build the same position in the USA, then eventually in Asia and globally.

The Company’s offering is focused on proprietary designs, where the majority are completely unique to Desenio. The products are delivered through a highly automated and vertically integrated business process where the logistics are handled through a combination of own warehouse and 3PL. This contributes to the Company generating a product gross margin of over 85% and an adjusted EBITA margin of 27% in 2020.

Desenio’s bonds are listed on Frankfurt Stock Exchange Open Market Quotation Board. For more information, please visit deseniogroup.com.
 

Key strengths and competitive advantages

• Disruptive approach to a large global design category - SEK 160 billion global affordable art prints and frames market, where the online specialist segment is expected to grow at 15-20% per year until 2024, outgrowing the total market which is expected to grow at approximately 5% in the same period⁴.
• Industrialised and data-driven creativity at scale generating proprietary design.
• First order profitability via social media/search-driven customer acquisition model with high-value influencer collaborations.
• Proven strategic playbook for internationalisation with significant potential in existing and unaddressed markets.
• Exceptional track record of profitable growth and cash generation.

Financial highlights:

Note that the financial information for 2019 is derived from the Company’s audited annual report for 2019, which has been prepared in accordance with the Swedish Accounting Standards Board accounting standard BFNAR 2012:1 (K3) and the Swedish Annual Accounts Act (1995:1554). The financial information for 2020 is derived from the Company’s unaudited year-end report, which has been prepared in accordance with the Swedish Annual Accounts Act (1995: 1554). The accounting principles applied for the year-end report is the Swedish Accounting Standards Board accounting standard BFNAR 2012:1 (K3). When applying the Swedish Accounting Standards Board accounting standard BFNAR 2012:1 (K3) as accounting principles, intangible assets in the consolidated balance sheet, such as goodwill, trademarks and customer relationships, are amortized during the assets useful life. Reported figures are based on consolidated financial statements of Desenio Group AB. For financial year 2020, the financial effects from the Poster Store acquisition are included as from the date of closing (16 December) to 31 December for 2020.

Financial targets

• In the medium term, the Company's goal is to achieve an annual organic sales growth of around 30% and potentially further supplemented by impact from add-on acquisitions. The goal is to grow net sales by approximately 35-40% during 2021. In the long term, Desenio's goal is to achieve sales growth in line or slightly above the online market.
• Desenio expects that the annual synergies from the acquisition of Poster Store in the medium term will exceed SEK 50 million. In 2021, about half of the medium-term synergies are expected to materialise.
• Desenio's goal is to maintain an adjusted EBITA margin of approximately 25% in the medium term. In 2021, a slight improvement is expected compared with the previous year's adjusted EBITA margin as a result of current expectations for materialisation of synergies, slightly offset by higher sales growth (compared to the medium-term target). Desenio expects to increase the adjusted EBITA margin over time in connection with the Company achieving economies of scale through continued net sales growth and the generation of synergies related to the integration of Poster Store. In the long term, the adjusted EBITA margin is expected to approach 30%.

Dividend policy

• Desenio intends to distribute excess liquidity to shareholders, subject to flexibility for strategic initiatives, such as expansion into new markets and / or acquisitions, as well as consideration of capital structure.
• Considering the above, Desenio intends to distribute 30-50% of net income for the year.

The Company’s financial targets set forth above constitute forward looking information that is subject to considerable uncertainty. The financial targets are based upon a number of assumptions relating to, among others, the development of the Company’s industry, business, results of operations and financial condition. The Company’s business, results of operations and financial condition, and the development of the industry and the macroeconomic environment in which the Company operates, may differ materially from, and be more negative than, those assumed by the Company when preparing the financial targets set out above. As a result, the Company’s ability to reach these financial targets is subject to uncertainties and contingencies, some of which are beyond its control, and no assurance can be given that the Company will be able to reach these targets or that the Company’s financial condition or results of operations will not be materially different from these financial targets.

Advisors

ABG Sundal Collier AB and Carnegie Investment Bank AB (publ) act as Joint Global Coordinators and Joint Bookrunners in the Private Placement and in the Listing. Advokatfirman Delphi KB acts as legal advisor to the Company and the Selling Shareholders. Advokatfirman Schjødt acts as legal advisor to the Joint Global Coordinators and Joint Bookrunners.
 

About Verdane

Verdane is a specialist growth equity investment firm that partners with sustainable, tech-enabled Northern European businesses to help them reach the next stage of international growth. Verdane can invest as a minority or majority investor, either in single companies or through portfolios of companies, and looks to deploy behind three core themes; the Digital Consumer, Software Everywhere and Sustainable Society. Verdane’s nine funds hold more than EUR 3 billion in total commitments and have made over 120 investments in fast-growing businesses since 2003. Verdane’s team of over 60 investment professionals and operating experts, based out of Berlin, Copenhagen, Helsinki, London, Oslo and Stockholm, is dedicated to being the preferred growth partner to tech-enabled businesses in Northern Europe. For more information, please visit verdane.com.
 

IMPORTANT INFORMATION

This press release does not constitute an offer or a solicitation to sell or acquire securities in the Company in any jurisdiction. The contents of this press release have been prepared by the Company and the Company is solely responsible for the contents hereof.

This announcement does not include any offer to the public to subscribe for shares or otherwise acquire shares or other financial instruments in Desenio, whether in Sweden or other jurisdiction. This press release does not constitute a prospectus in accordance with the Prospectus Regulation. Investors should not subscribe or deal in securities referred to in this press release.

Copies of this press release or the information herein may not, wholly or partly, direct or indirect, be distributed or sent to the United States, Hong Kong, Canada, New Zealand, Japan, Switzerland, South Korea or South Africa or any other jurisdiction where such distribution would be illegal or require registration or other measures.

The shares in the Company have not been registered and will not be registered under the United States Securities Act of 1933 as amended (the “Securities Act”) or under the securities laws of any state or other jurisdiction in the United States and may not be offered, sold or otherwise transferred, directly or indirectly, in or to the United States, except in accordance with an applicable exemption from or through a transaction that is not subject to the registration requirements of the Securities Act and in accordance with the securities laws of the relevant state or other jurisdiction in the United States.

This press release does not constitute an offer to persons in the United Kingdom to acquire securities. No prospectus has been registered, or will be registered, in the United Kingdom regarding the securities mentioned in this press release. In the United Kingdom, this press release and other material concerning the securities mentioned herein may be distributed and directed only to (i) professional investors covered by Article 19 (5) of the Financial Services and Markets Act 2000 (the Financial Promotion) (the “Order”), (ii) high net-worth entities under Article 49 (2) (a) to (d) of the Order, and (iii) other persons to whom the prospectus may be lawfully served (all such persons are collectively referred to as "relevant persons"). This press release is addressed only to relevant persons and may not be used or invoked by persons who are not relevant persons. All investments or investment activities to which this press release relates are only available to relevant persons and will only be directed to relevant persons. Persons who are not relevant persons should not take any actions based on this press release, nor rely on it.

This press release does not constitute an offer to persons in Australia to acquire securities. No documentation has been, or will be, lodged with the Australian Securities and Investments Commission as a disclosure document under Chapter 6D of the Australian Corporations Act 2001 (the “Corporations Act”). Such document must only be provided to ‘wholesale clients’ as defined in the Corporations Act in Australia. Such document does not purport to include the information required of a disclosure document under Chapter 6D of the Corporations Act. Accordingly: (a) no New shares or other securities may be offered for issue to any person in Australia except to ‘wholesale clients’ as defined in the Corporations Act and in circumstances where disclosure to investors is not required under Part 6D.2 of the Corporations Act; and (b) no share or other securities may be offered for sale (or transferred, assigned or otherwise alienated) to investors in Australia for at least 12 months after their issue, except in circumstances where disclosure to investors is not required under Part 6D.2 of the Corporations Act.

Furthermore, the securities mentioned in this press release have not been registered and will not be registered under any applicable securities law in Hong Kong, Canada, New Zealand, Japan, Switzerland, South Korea or South Africa and may, with certain exceptions, not be offered or sold to or within, or on behalf of a person or for the benefit of a person who is registered, resident or located in, these countries.

In the EEA Member States, this press release and the information contained herein are intended only for and directed to qualified investors as defined in the Prospectus Regulation. The securities mentioned in this press release are not intended to be offered to the public in any EEA Member State and are only available to qualified investors except in accordance with exceptions in the Prospectus Regulation. Any invitation, offer or agreement to subscribe for, purchase or otherwise acquire such securities will only be processed for qualified investors. Persons in any EEA Member State who are not qualified investors should not take any actions based on this press release, nor rely on it.

Financial information

The financial information for 2019 is derived from the Company’s audited annual report for 2019, which has been prepared in accordance with the Swedish Accounting Standards Board accounting standard BFNAR 2012:1 (K3) and the Swedish Annual Accounts Act (1995:1554). The financial information for 2020 is derived from the Company’s unaudited year-end report, which has been prepared in accordance with the Swedish Annual Accounts Act (1995: 1554). The accounting principles applied for the year-end report is the Swedish Accounting Standards Board accounting standard BFNAR 2012:1 (K3). The historical financial information remains subject to the Company’s normal audit process. The pro forma financial information in this press release has not been audited or reviewed by the Company’s independent auditors. The financial information contains certain financial key figures that have not been defined according to K3. The Company assesses that these key figures provide a better understanding of the Company's financial trends. The Group's key figures have not been revised or reviewed by the Group’s auditor unless otherwise stated.

Forward-looking information

This press release contains certain forward-looking information and statements that reflect the Company's current views on future events as well as financial and operational developments. Words such as "refer", "assess", "expect", "can", "plan", "estimate", "calculate", "could" and other expressions that indicate indications or assessments regarding future developments or trends, and which does not relate to historical facts, constitutes forward-looking information. Forward-looking information is inherently associated with both known and unknown risks and uncertainties because it is dependent on future events and circumstances. Forward-looking information does not constitute a guarantee regarding future results or development and the actual outcome may differ materially from what is stated in forward-looking information. The Company does not make any representations about publishing updates or revisions of forward-looking information as a result of new information, future events or similar circumstances other than as provided by applicable mandatory rules and regulations.

¹ Refers to Verdane Capital IX (D) AB and Verdane Capital IX (E) AB.
² Refers to the Principal Shareholder as well as a number of other shareholders, including certain members of the board of directors and senior management.
³ Value of the Company’s equity capital based on the number of shares and warrants in the Company after the Listing.
⁴ Based on Company estimates, in addition to information provided by third party sources.
⁵ Consolidated pro forma financial figures including Poster Store as if the acquisition had taken place on 1 January 2020.
 ⁶ Adjusted for non-recurring items of SEK 13 million in 2020 related to transaction costs and warehouse relocation costs.