Sawt Falasteen - Spain's fashion and beauty group Puig poised for IPO

For the family-owned Puig Group, which has expanded rapidly into luxury goods, going public is a big step which will allow it to compete with the giants of the sector such as Estee Lauder, Hermes, Kering and LVMH.

The move "is a decisive step in Puig's 110-year history," chairman and CEO Marc Puig said last month, emphasising the firm's "long-term approach".

Founded in Barcelona in 1914 by businessman Antonio Puig Castello, the group has grown over the years to become a heavyweight in the cosmetics, fragrance and fashion industries, bolstering its stance in recent years with a string of prestigious acquisitions.

Among its brands are Paco Rabanne, Nina Ricci, Charlotte Tilbury, Carolina Herrera and Dries Van Noten. It also holds a majority stake in the Jean Paul Gaultier label and has licensing agreements with Prada, Christian Louboutin and Comme des Garçons.

- A family firm -

The Barcelona-based group, which specialises in perfumes and cosmetics, enters the market on Friday with an opening guidance price of 24.50 euros (about $26) per share.

Analysts said it was Spain's biggest IPO this year and one of the largest in Europe.

The price gives the group an estimated market capitalisation of nearly 14 billion euros, which will allow it to enter Madrid's Ibex 35 exchange, which groups Spain's 35 largest companies.

The flotation will take place in two stages, the first of which would seek to raise an initial 1.25 billion euros through newly issued shares.

It would then make a "larger secondary offering" of existing shares held by its holding company Exea to raise nearly 1.36 billion euros.

That could then be complemented with the sale of shares reserved for specific investors for another 390 million euros, which would allow the group to raise around 3.0 billion euros.

Despite the move, the Puig family said it would retain a controlling interest in the company with 71.7 percent of the shares, along with "the vast majority of voting rights" -- 92.5 percent -- within the board of directors.

- 'Greater financial clout' -

The idea of an IPO had first been raised by Puig himself in an interview with the Financial Times in October 2023, in which he said being accountable to the market would bring "a discipline" that would head off any issues when passing the baton from one generation to the next.

"Sometimes family businesses can lose their position in the market. They can start to die slowly and nobody inside the company is aware of it," he told the paper. "If you’re accountable (to investors), those things can be noticed."

According to Javier Cabrera, an analyst at XTB, the IPO would allow the group to build "greater financial clout" by taking advantage of "the positive stock market dynamics" in the luxury goods and fashion sector.

Luxury goods are enjoying a buoyant moment with sector heavyweights posting record sales in 2023, despite a slowdown following two years of double-digit growth.

Last year, Puig posted sales of 4.3 billion euros, a 19 percent increase on 2022, logging net profits of 465 million euros, up 16 percent year-on-year.

And that growth could gather pace thanks to Puig's strategy of acquisitions, which in recent years has led to "a high level of growth" and "a good diversification of revenues, both geographically and in terms of business lines", Cabrera said.

He also pointed to the group's strong showing in China, a major consumer of luxury goods.

H.Nasr--SF-PST