Shares in Europe's largest online fashion retailer Zalando rose on their Frankfurt stock market debut today, one of a flood of internet start-ups hoping to ride the coattails of China's Alibaba.
Zalando's shares had been priced at €21.50 each but the shares began trading up 12% at €24.10.
They pared gains in afternoon trade to trade just above the offer price valuing the retailer at about €5.3 billion, almost the same as national flagship carrier Lufthansa.
Berlin-based Zalando started out selling shoes in Germany in 2008 inspired by the US shoe and clothing retailer Zappos.com, now owned by Amazon.com.
It competes with British online retailer ASOS, which, until its sales started unravelling this year, had been a great success story.
Zalando's core markets are Germany, Switzerland and Austria and it sees huge potential because it says it has just half a percentage point share of a European fashion market worth €420 billion.
Germany has a string of internet start-ups poised to join the stock market with Rocket Internet - which helped to launch Zalando and numerous other e-commerce sites - taking the plunge tomorrow.
Classified advertising firm Scout24 is also expected to announce its listing next week.
E-commerce giant Alibaba successfully listed in New York earlier this month in the largest ever initial public offering, raising $25 billion and tempting others to try their luck.
"It feels a bit like the first day of school. Now the only thing we need to do is write good grades," said Zalando board member Robert Gentz after ringing the IPO bell at the Frankfurt Stock Exchange.
Last month Zalando unveiled a new advertising campaign, website, packaging and apps and saw first-half sales rise by 29.5% to €1.047 billion, producing a small net profit for the first time.
Zalando is planning to use the €605m proceeds from the IPO to invest in new technology. It wants more of its own fashion labels and the latest apps for smartphones to keep customers coming back.
The retailer is also considering expanding further into eastern Europe.
Zalando had not priced its shares right at the top of its €18-22.50 price range because it wanted a smooth performance following its debut, several sources familiar with the pricing of the deal said.
Swedish investment firm Kinnevik is Zalando's biggest shareholder and will have a post-IPO stake of about 32%.
The investment vehicle of Germany's Samwer brothers, the founders of Rocket Internet, will have 15%. Retail investors bought just 2% of the shares in the IPO.
