HONG KONG — French beauty group L’Occitane International SA said Sunday that it intends to raise as much as 5.49 billion Hong Kong dollars, or $707.2 million, through an initial public offering.
This will be the first time a French company will have listed on Hong Kong’s bourse. “We grew L’Occitane in Asia out of Hong Kong so it makes sense to go where our customers are,” explained chairman and chief executive officer Reinold Geiger during a video press conference from New York.
The offer consists of 364.1 million shares, or about 25 percent of the company, to be priced from 12.88 Hong Kong dollars to 15.08 Hong Kong dollars, or $1.66 to $1.94, a share. The subscription begins today and will close April 29. The final price will be announced on or about April 30 and the shares are expected to commence trading on the Hong Kong stock exchange on May 7.
The company estimates net proceeds from the offering to total 2.45 billion Hong Kong dollars, or $315.6 million, after expenses, if an offer price is assumed of 13.98 Hong Kong dollars, or $1.80, a share, the midpoint of the stated range.
Managing director André Hoffmann said half the shares on offer are new and half are from the controlling shareholder parent group L’Occitane Groupe SA, in which Geiger holds a 51.9 percent stake.
In 2001, French skin care brand Clarins took a 22 percent minority stake in the company but in 2007 sold half of it back to the parent. Clarins currently holds and, immediately following the completion of the offering, is expected to hold 10.1 percent of L’Occitane Groupe SA.
Hoffmann cited strong sales growth in the Asia-Pacific region as the reason behind listing in Hong Kong. For the nine-month period ended in December, the company posted net income of 66.4 million euros, or $94.5 million at average exchange for the period, on sales of 462.7 million euros, or $658.4 million. Japan, Hong Kong and Taiwan accounted for 35.2 percent of sales.
Approximately 65 percent of the capital raised from the IPO will be used to fuel expansion for L’Occitane and Melvita, a French natural skin care brand acquired in 2008. There are currently 753 L’Occitane boutiques in 27 countries, of which 270 are located in Asia-Pacific. Additional units, similar in number, are operated by outside parties. The group opened its first Melvita store outside of France in December at IFC Mall in Hong Kong and plans to enter the U.S. market with the brand this year.
The company plans to grow the number of global boutiques by another 650 stores over the next five years, placing particular focus on high-growth emerging markets such as India, China, Mexico, Brazil and Russia, as well as countries where it has not yet achieved a mature presence such as Japan, the U.S., U.K., Germany and Korea.
Another 20 percent of the proceeds would be used to strengthen the manufacturing process, including the building of a new central distribution center, while the remaining funds would be used for developing new products, growing the Internet and e-commerce channels and general working capital.
The company plans to funnel 20 percent of its profits into dividends. HSBC Holdings Plc, UBS AG and CLSA Asia-Pacific Markets are bookrunners on the deal.
Founded in 1976 by Olivier Baussan, the beauty brand’s product releases are tied to the harvests of French farmers and its home-grown approach to merchandising has included a cream requiring mixing and refrigeration by the user.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)