Wry & Dry

It's a... a... a Yeti!

Readers will be familiar with a Yeti.  Also called the Abominable Snowman, it is an ape-like cryptid (i.e. an animal whose existence has been suggested but not documented) taller than an average human that is said to inhabit the Himalayan region of Nepal, Bhutan and Tibet.

[W&D used to go to a place called Victoria Park, where he swears he used to see... oh, never mind.]

Well, brace yourselves for the modern Yeti.  It's an expensive, niche-supplied cooler.  Rather like an up-market and improved Esky.

The company’s stainless-steel mugs were a hard-to-find holiday gift item in 2015, thanks in part to a wave of tweeting by owners marveling at their ability to keep drinks hot or cold for hours.  The company touts its coolers’ seamless construction and the two walls of stainless steel that give its mugs an insulating vacuum. 

Its ice chests are so popular they have become a favorite among thieves. Coolers start at $250 and run to $1,300 for a model Yeti says “can hold multiple elk.”  Multiple elk?

YetiSpot the real Yeti

W&D is drawn to the Yeti not because he has an interest in another cooler.  The Esky will do.  But because the company that makes the Yeti is about to have an IPO (Initial Public Offering, or 'float') in the US.

And the cream would go to Cortec Group, who invested US$67m in 2012 for a 66% stake in Yeti.

That stake would turn to $3.3 billion if the company is floated at a value of $5 billion.

Nice work.  If you can get it.

Yeti’s sales more than tripled in 2015 to $469 million.  But it lost $38.2 million in the first quarter of 2016 as expenses for selling and general and administrative purposes rose to $149.8 million from $13.9 million in the year-earlier quarter.

So think of the prime investor.  It's all about hot products.  

Private-equity firms have their eyes out for hot products.  Readers will know that Carlyle Group made a roughly $500 million investment in Beats Electronics that made Carlyle a profit of about $1 billion when Apple bought the headphone maker.

In Yeti’s case, the risk for potential investors—including Cortec, which will continue to own a majority of the company after the IPO—is that that sort of popularity can be fickle.  

For every Beats Electronics, there is a GoPro (maker of the action-camera and Karma - a soon-to-be-released camera drone), whose shares are down 29% from their IPO price.

Yeti.  Nice to own the product.  But W&D is not sure about the IPO.