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Puig, the owner of Carolina Herrera and Dries Van Noten, Jean Paul Gaultier, Nina Ricci and Rabanne, has made moves to go public while retaining a majority share. The IPO could give Puig a market value of at least €13.7 billion.
Crossposted in: Dries Van Noten - Designer, Harris Reed - Designer, Creative Director of Nina Ricci and Julien Dossena - Designer, Creative Director of Rabanne
Puig Aims to Raise €2.5 Billion in IPO
The family-owned premium beauty conglomerate has confirmed it will float shares on the Spanish stock exchange while retaining majority control, following months of speculation.
By DANIELA MOROSINI
08 April 2024
Puig, the family-owned Spanish beauty conglomerate, announced plans for an initial public offering on the stock exchanges in Barcelona, Madrid, Bilbao and Valencia. The company owns 14 brands including Charlotte Tilbury, Paco Rabanne and Byredo, as well as a number of fragrance licences.
The company hopes to raise €1.25 billion ($1.3 billion) through the first round of IPO, followed by a larger secondary sale that would bring the total fundraising north of €2.5 billion. The Puig family will retain a majority stake in the company and the “vast” majority of voting rights, the company said.
In 2023, Puig reported net revenues of €4.3 billion ($4.6 billion), up 19 percent, while net profit rose to €465 million ($503 million), up 16 percent on the previous year.
In October 2023, chairman Marc Puig confirmed the group was mulling an IPO among other strategic options to raise fresh capital. In a statement released today, Marc Puig said the decision was a “decisive step” in the company’s 110-year history, and that it was important to ensure the “right checks and balances” were in place during a “generational transition.”
“We believe that the balance of being a family-owned company that is also subject to market accountability will allow us to better compete in the international beauty market during the next phase of the company’s development,” said Marc Puig, adding that being a publicly listed company will align its corporate structure with those of best-in-class, family-owned companies in the global premium beauty sector. Top industry players such as L’Oréal and Estée Lauder have long been publicly traded, as well as retaining founding family ownership stakes.
The company plans to further diversify into skincare and makeup, and focus on prioritising brands it owns outright rather than licences, which can be expensive to renew and disruptive when they lapse. 95 percent of revenues came from fully-owned or majority-owned brands like Paco Rabanne, Dries Van Noten or Nina Ricci last year, Puig said.
The company has been making more acquisitions of late – in January, it purchased luxury skincare brand Dr. Barbara Sturm, following its acquisitions of Byredo and Charlotte Tilbury since 2020.
“Our unique and creative DNA has allowed us to attract leading founders and brands… We strongly believe that building premium brands requires long-term thinking,” Marc Puig said.
Currently, fragrance is Puig’s largest revenue driver. But the group’s smallest segment, skincare, grew the most in 2023, with revenues up 31 percent to €431 million ($466 million). The company has long been profitable, Puig added.
Why Puig’s IPO Timing Couldn’t Be Better
The family-owned Spanish conglomerate has confirmed it will pursue a public offering in the coming months. After a fairly fast transformation, the company now has a bold diversification strategy and a strong mix of brands in place, making it more ready than it has ever been for the European markets.
By PRIYA RAO
12 April 2024
BoF PROFESSIONAL
It’s Puig’s time.
After months of speculation, the 110-year-old, family-owned conglomerate on Monday announced its plans for an initial public offering on the Spanish stock exchange. The company hopes to raise €1.25 billion ($1.3 billion), followed by a larger share sale that would bring the total fundraising north of €2.5 billion ($2.7 billion). It reportedly expects a valuation of €8 ($8.5 billion) to €10 billion ($10.7 billion), which would put it in the same range as Coty and Shiseido.
For Puig, the timing to go public couldn’t be better. In March, the company reported 2023 results of €4.3 billion ($4.6 billion), all but ensuring it is on track to hit its goal of €4.5 billion ($4.8 billion) in annual sales by 2025 well ahead of schedule. Earnings before interest, taxes, depreciation, and amortisation rose 33 percent to €849 million ($925 million).
“Puig is on the right side of the luxury reset after the pandemic, and the appetite for profitable growth stories is very strong in Europe even more than the US,” said Navina Rajan, senior private capital analyst for the Europe, the Middle East and Africa markets at PitchBook.
The Spanish conglomerate has been one of the most exciting firms to watch over the last several years, transforming itself from being known primarily for licensing fragrances from luxury brands, to a diversified portfolio that includes cosmetics and skincare. Puig has made the right bets on some of the buzziest lines in market today from Charlotte Tilbury (2020) and Byredo (2022) to Kama Ayurveda (also 2022) and the recently acquired Dr. Barbara Sturm. And that M&A activity is not expected to slow. Today, the company’s portfolio includes 14 owned brands.
Though fashion and fragrance remains a high point for Puig — growing by 17 percent in annual results thanks to the success of best sellers like Rabanne’s 1 Million fragrance and Carolina Herrera’s Good Girl perfume — skincare is the firm’s fastest growing segment and makeup continues to perform due to Charlotte Tilbury.
Makeup and skincare will be key focus areas for Puig to build out. Following the success of the Rabanne fashion line and 1 Million, the company made an ambitious bet last August with a cosmetics launch, complete with lipsticks, glitter sprays and metallic serums that smartly tie back to its space age luxury arm. And Charlotte Tilbury has been a stealth winner in skincare as well thanks to hybrid hero products like its Water Cream.
“They’re extremely disciplined, extremely targeted, and they have a very deliberate strategy,” said Elsa Berry, founder and managing director of Vendome Global Partners, which advised on Dries Van Noten’s sale to Puig in 2018. “They have brands that are highly complementary across the prestige, premium beauty space, and none of them cannibalise the other.”
Because of its diversification, I, too, think Puig will fare better than many of the other fashion and beauty companies that have gone public in recent years. Often they were built around a single brand, some great (Birkenstock, Olaplex) and others less so (The Honest Company). Going public with a portfolio of brands is a far superior move to being a monobrand company when consumer and market preferences change (the exception being E.l.f. Beauty, which has also pursued a house of brands strategy as of late). Though conglomerates with successful mass and masstige lines or strong niche fragrances have been faring better today, beauty remains cyclical.
My one question for Puig is around succession. The company has been family-owned and run for over a century. Chief executive and chairman Marc Puig Guasch is the third generation to lead the company, and clearly, the firm values founders in its acquisition strategy — Tilbury, Sturm and Byredo’s Ben Gorham have all stayed with their brands post purchase. But with the recent news of fashion designer Dries Van Noten leaving his namesake label after his menswear show in June, (Puig purchased the brand six years ago), it is something to consider as it charts its next phase of growth.
“Typically, you don’t see family owned businesses be as bold, but Puig has been very clear with the plan they have in mind and it continues to work in their favour,” said Ariel Ohana, managing partner at investment bank Ohana & Co.
An IPO enables Puig to better compete globally with other big beauty houses like L’Oréal and the Estée Lauder Companies. And with the latter’s M&A ambitions seemingly stalled, Puig becomes the next obvious acquirer in many cases.
There are some fears that luxury firms’ are slowing down post pandemic and beauty stocks aren’t as resilient as they once were. Ulta Beauty scared the market with its grim outlook, even causing E.l.f.’s stock to pause its seemingly never-ending climb. But even with negative market signals, beauty stocks have fared well in good times, been resilient in bad times and preserved their margins — and Puig’s financial profile is one that’s outperforming the category. With €2.5 billion in capital, the company can only realise its lofty beauty ambitions even faster.
Source: BoFThe Hazards on Puig’s Path to Becoming a True Luxury Conglomerate
Excitement for its IPO is building, but in order to realise its ambitions, more acquisitions and operational expenses might be required.
By BLOOMBERG
25 April 2024
BoF PROFESSIONAL
Over four days of celebrations to mark its centenary in 2014, Spain’s biggest beauty products company inaugurated a new headquarters in Barcelona attended by the Iberian nation’s then Prince Felipe and threw a splashy party for more than 1,000 people at the world’s largest art nouveau complex.
But in a quieter yet more important marker of that milestone, chief executive officer Marc Puig, a member of the founding family’s third generation, took 50 of his top employees that year to Harvard University — his alma mater — to chalk out a growth path for the company in a case study that was co-authored by Krishna Palepu, a distinguished business school professor, and Puig’s then board member Pedro Nueno.
Ten years on, the fruits of that blueprint are evident: With such well-known perfume and fashion brands as Rabanne, Jean Paul Gaultier and Carolina Herrera, revenue at Puig — which presents itself as a smaller yet more luxurious version of France’s L’Oréal — has more than doubled and the group is set to go public in the largest European offering of the year.
But Puig’s share sale comes as the company increasingly goes against well-heeled luxury companies from LVMH Moet Hennessy Louis Vuitton to Kering SA in an intensely competitive market, suggesting it will need to keep investing to sustain its growth and may need to spend big on acquisitions if it wants to increase its market share.
“Puig’s journey to becoming luxury will not be easy,” said Xavier Brun, a portfolio manager at Trea Asset Management, who plans to buy the company’s shares. “Although some of its more exclusive brands compete with luxury houses, overall the more classic perfume range, like Carolina Herrera or Rabanne, is one step behind.” That said, the “element of luxury is what attracted us to the name,” he said.
On April 18, the company and the Puig family detailed plans to raise about €2.6 billion ($2.8 billion) in an initial public offering that could give the group a market value of as much as €13.9 billion, according to terms seen by Bloomberg. Puig’s stock would be valued at between 11 and 15 times earnings, less than the 18 to 22 range for its more established peers L’Oréal and Estée Lauder, based on Bloomberg Intelligence analysis. The company plans to use the proceeds to refinance recent acquisitions, fund the growth of its brands and expand its portfolio.
The IPO would add the Puigs to the ranks of Europe’s wealthiest families, with its fortune amounting to as much as $11.7 billion based on the top end of the IPO pricing range, according to the Bloomberg Billionaires Index.
It would also mark a pivotal moment for the 110-year-old family-owned business. Only two family members — both in their early 60s — currently work for the group, which has said the next generation won’t be involved in its day-to-day running. That leaves it with an issue confronting many family owned businesses: generational change. Being held accountable by the markets will protect the company as the number of heirs to the family fortune expands, it said. The third generation alone has 14 heirs.
The move mirrors efforts by other family owned entities that seek to both professionalise and put more rigid structures in place to avoid conflicts as holdings in their groups become more disperse.
“It’s pretty common that families will move towards maybe having a family share at the board but not having a family CEO at the business,” said Jennifer Pendergast, a professor who studies such entities at Northwestern University’s Kellogg School of Management. “They typically do it because they acknowledge that the more family members there are the more complicated this is going to get, and it’s going to be something that could create tension or conflict within the family so it’s just easier to say going forward we won’t have family members because we don’t have to worry about choosing them.”
Even before announcing the IPO plan, Puig had begun making changes to the family-run enterprise. In recent years it worked on making the board more independent: CEO Marc and Vice Chairman Manuel, both 62, are the only family members on the 13-strong company board.
In its early days, Puig was run very much like a family concern. The founder’s four sons discussed company strategy over family lunches or during holidays at the clan’s vacation home in Vilassar de Dalt, outside of Barcelona. But now, the family says it wants its members to just be “good owners.”
The company traces its history to 1914, when its founder Antonio Puig created it in Barcelona from the ashes of his import business. The story goes that a German submarine sank a vessel carrying an uninsured shipload of his goods, putting an end to that trading venture. Antonio’s new company distributed perfumes, and before long began to produce its own line of products, including the first lipstick manufactured in Spain and a best-selling lavender fragrance. The bulk of its growth in the 20th century came from perfumes under license. In the 50s, the second generation led by Antonio and Mariano, focused on revitalising the group’s image and marketing, and expanding overseas, including in France, the US and the UK.
The road got bumpy at the turn of the century, as Marc and Manuel Puig were readying to take the helm. Sales were falling and several product launches failed. Poor financial results, paired with breaches to credit obligations, forced the company to undergo a complete restructuring in 2004. Appointed co-CEOs that year, the cousins over the next few years cut a fifth of the company’s staff and abandoned some of its mass-market products like soaps and deodorants to prioritise fashion and perfumes, turning Puig around from a loss-making entity.
Over the last 13 years, the company built the bulk of its 17-label portfolio, spending €2.5 billion on a buying spree that included the acquisition of Swedish cult perfume firm Byredo and beauty brand Charlotte Tilbury. Last year the group saw a 33 percent jump in profit of €849 million on revenue of €4.3 billion.
Puig’s acquisition drive began with a transformative deal with designer Paco Rabanne in 1968 to make and distribute his perfumes. The accord eventually led to the purchase of Rabanne’s fashion business, too. Puig tapped a similar playbook, of using fashion to sell fragrance through deals with Carolina Herrera, Nina Ricci and Jean Paul Gaultier in the decades that followed. In 2018, it bought a majority stake in Dries Van Noten, one of the last independent names at the top of Europe’s fashion sector, and later launched a perfume and cosmetics line.
It also orchestrated a shift away from selling products under licenses to focus on the brands it owned. The company’s turnaround has catapulted Puig into the world’s fourth-biggest perfumes company in the prestige category, according to its IPO prospect. Two of its brands — Rabanne and Carolina Herrera — are among the 10 best-selling fragrance brands globally, it said, citing Euromonitor.
But the firm faces growing competition as it increasingly runs up against French luxury behemoths LVMH and Kering, both of which are tapping the high-margin, high-end fragrance market that Puig first entered with the acquisitions of Penhaligon’s and L’artisan Parfumeur in 2015.
“They are playing a market where size matters,” said Bloomberg Intelligence analyst Andrea Ferdinando Leggieri. “But the more the bigger brands acquire, the more difficult it becomes to catch up so I think now is the moment for Puig to catch up, or stay behind.”
Last year, Kering reportedly paid €3.5 billion for one such brand called Creed fragrances as it builds its own beauty division under the direction of a former Estée Lauder executive. L’Oréal has also been in talks about potentially buying a minority stake in Omani luxury fragrance company Amouage, Bloomberg reported on Apr. 4.
“LVMH, Kering, Richemont, found during the last few years that the big category for profit growth is really jewellery, watches, handbags and beauty, " said Linda Levy, president of US-based trade group the Fragrance Foundation. “Those particular categories were in silos within the companies and all operated individually, and what I see in the big picture is that they are looking to become more efficient. It’s going to be an interesting shift in the industry.”
At least for now, Puig has an edge in its key segment, says Ann Gottlieb, a New York-based perfumer, or a “nose,” as they’re called in the business, who has worked extensively with Puig.
“Puig essentially has always been a fragrance driven company, pure and simple; the majority of competitors have fragrance as a part of a wider business,” she said.
And with more acquisitions critical to its future success, reaching out for funding from markets was the ideal solution for the group, said Northwestern’s Pendergast.
“You grow by acquiring other brands and putting a lot of dollars behind marketing, promoting you brands, so for a family to be able to fund that without some sort of public equity is pretty difficult,” she said. “So if they can still retain control of the ability of electing the board, choosing the CEO and bring in money to help grow, that’s a great benefit for them. You get the best of both worlds.”
By Clara Hernanz Lizarraga
Crossposted in: Dries Van Noten - Designer, Harris Reed - Designer, Creative Director of Nina Ricci and Julien Dossena - Designer, Creative Director of Rabanne
