In recent years, due to the global economic uncertainty brought about by the pandemic, there have been few IPOs in the beauty industry on the capital market. Among them, only Kenvue, the consumer health business spun off from Johnson & Johnson, successfully went public. This also marks the only significant IPO in the beauty industry in recent years.
According to data from Dealogic, last year marked the lowest point for global IPOs since 2009, with only $120 billion raised.
Since the beginning of 2024, as the capital markets have rebounded, IPO transactions that were nearly halted due to high interest rates and economic uncertainty have gradually picked up steam. Some significant beauty companies are seeking to go public in the first half of the year.
Spanish beauty conglomerate Puig began seeking an IPO as early as September last year. In February this year, the Barcelona-based fashion and beauty group appointed a banking consortium to lead its initial public offering, with Goldman Sachs and JPMorgan serving as global coordinators.
According to a report by Expansión, Bank of America, BNP Paribas, Caixabank, and Santander Bank will also participate as joint bookrunners. Puig is expected to go public before the summer. Puig has explored various options, including not only the Madrid Stock Exchange but also the New York Stock Exchange or Euronext Paris. One of the reasons Puig is considering listing on the New York Stock Exchange or Euronext Paris is to seek the highest valuation to ensure its future growth trajectory. However, the Spanish capital seems to have become the chosen destination.
According to Spanish newspaper El Economista, this fashion and beauty conglomerate, which owns brands like Jean Paul Gaultier, Carolina Herrera, and Nina Ricci, is preparing to go public in May. Considering the latest financial performance of the group, Puig’s estimated valuation in the stock market, within the European luxury industry context, is approximately 8.4 billion euros, although some estimations have valued it as high as 15 billion euros in certain instances.
Additionally, in early February this year, according to unnamed sources cited by the Financial Times, private equity group EQT is reportedly relaunching the IPO plan for dermatology company Galderma. It is reported that Galderma is preparing for a potential IPO in Switzerland in the first half of this year, with the company’s valuation possibly reaching around $20 billion.
As early as 2022, Galderma began preparing for an IPO, but due to the difficulties in the capital markets in 2022, the plan had to be postponed. In March 2023, EQT hoped to revive Galderma’s IPO plan, but due to the turmoil in the global markets caused by the trust crisis in the US banking sector in March, EQT decided to postpone Galderma’s IPO plan.
EQT expects to raise €3 billion through the IPO. Sources familiar with the matter suggest that if the IPO is successful, Galderma’s valuation could reach $20 billion. Reuters, citing data from the SIX Swiss Exchange, reports that if Galderma successfully goes public, it will be the largest IPO in Switzerland since 2000.
Capital is beginning to reassess the beauty industry
Since last year, capital has begun to reexamine the beauty industry. Looking at the 80 significant mergers and acquisitions in the beauty industry over the past 23 years as compiled by CHAILEEDO, aside from acquisitions by beauty giants, a significant portion of the acquiring parties in these transactions are private equity funds.
Due to the ongoing challenge of a sustained high-interest-rate environment in the financial markets, the cost of borrowing for certain transactions, particularly in the private equity sphere, has become prohibitively high. With macroeconomic trends tending towards stability, mergers and acquisitions in the beauty industry are primarily being driven by private equity and other financial investors, including venture capital firms like Advent International and L Catterton. Advent International, for instance, acquired the French niche perfume brands Parfums de Marly and Initio Parfums Privés in 2023, reportedly for a combined sum of $700 million.
In 2023, L Catterton, the private equity fund under the world’s largest luxury conglomerate LVMH, made a series of significant investments in the beauty industry. L Catterton engaged in nearly 7 acquisitions in the beauty sector in 2023, including the high-end skincare brand Irene Forte Skincare from Italy, the haircare brand Maria Nila from Sweden, the recombinant collagen company Trautec from China, and the children’s skincare brand Hi!papa.
Pauline Mexmain, a senior manager in Kearney’s consumer practice said, “After many years of being an attractive target for mergers and acquisitions, the beauty and personal care space is facing major changes in M&A deal sizes, particularly in the mid-range sector. The lower multiples offer unique opportunities for both financial and strategic acquirers who are considering investing while putting pressure on VC and PE-backed companies.”
