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Get ready for IPO fever.
According to IPO Boutique, which tracks initial public offerings, there were 143 active IPOs in the pipeline as of Monday, covering all sectors.
The fashion world is right in the mix, and one of the first out of the gate could be a $700 million IPO for Coty Inc., which could hit the market as early as next month. Coty first filed to go public last May but then pulled those plans. An updated filing of its plans, an S-1/A with the Securities and Exchange Commission, appears imminent.
Also in the pipeline is Claire’s Inc., the teen accessories retailer acquired in 2007 for $3.1 billion by private equity firm Apollo Management. Claire’s on May 3 filed to raise $100 million in an IPO. The filing said proceeds will be used to repay debt.
Others are said to be eyeing the stock market for fashion companies, although they haven’t filed their shelf registrations.
As reported, private equity firms TPG Capital and Warburg Pincus are studying an IPO option for Neiman Marcus Inc. as they seek to cash in on their investment. Credit analysts have been saying that Bain Capital is also considering an IPO as an exit strategy for Burlington Coat Factory.
Kellwood Co., which is owned by private equity firm Sun Capital Partners, is said to be mulling a partial spin-off of its Vince unit.
Vince has selected Goldman Sachs Group Inc. and Robert W. Baird & Co. to lead an IPO that could raise $200 million, according to a Reuters report Monday. A spokeswoman for Kellwood declined comment.
With the Dow Jones Industrial Average above the 15,000 level for a week now, there’s hope in the markets that the economy is showing signs of sustained improvement, not to mention a more viable place for parking one’s investment.
Steve Davis, managing director at Intrepid Investment Bankers LLC, said, “Ultimately, the stock market reflects two things: confidence in the economy and where it is headed, and a place where they can put capital [to work].”
Noting that other alternative investments such as bonds and U.S. treasury securities aren’t as attractive yieldwise, Davis added, “Certainly, unemployment and housing are more positive today than they’ve been over the last five years. Part of that is reflective of why the stock market is doing well.”
For now, all eyes are on Coty. If successful, it would be the largest IPO in the fashion and beauty space since Michael Kors Holdings Ltd. raised $944 million in its December 2011 offering in Hong Kong.
In the time between the initial filing of its prospectus last May and now, Coty has seen some changes. It has a new chief executive officer in Michele Scannavini, who took over from Bernd Beetz in July. Instead of going public last October as expected, it is believed that the company elected to hold off so Scannavini could have some months under his belt as ceo before facing Wall Street.
With Scannavini as ceo, Jean Mortier was tapped to head up Coty Prestige, based in Paris. The appointment of Mortier, who has strong retailer partnerships and a key understanding of the dynamics of the emerging markets, was seen as a move by Coty to bolster its bench strength as it prepared for the IPO.
Mortier has played a key part in Coty’s global management structure as senior vice president, commercial, since 2005. He joined the company in July 2005, when Coty purchased Unilever Cosmetics International, where he worked as senior vice president and chief financial officer of Unilever’s Calvin Klein Cosmetics division. Mortier also played a strong role in the crucial travel retail business.
Prior to exploring an IPO, Coty, while under Beetz, had a failed $10.7 billion bid for Avon Products Inc. The beauty firm, a powerhouse in fragrances, also has been moving on to greener pastures such as color cosmetics, the red-hot nail-care and enamel category and skin care.
That’s a good move as one financial observer said Wall Street analysts and investors will want to know how Coty plans to grow the business and how the company can leverage its current product category portfolio and geographies over the long term. They’ll also want to get a handle on Coty’s strategy and its take on future acquisitions, the observer said.
There are other implications for the beauty sector as well.
Intrepid’s Davis, who specializes in mergers and acquisitions with expertise in the beauty-care sector, said, “The direct consequences of Coty going public are that there will be more pressure on Coty to grow post its IPO. Historically, beauty firms grow through acquisitions.”
Davis emphasized that anytime there’s a successful capital event such as an IPO, it draws attention to the market the firm is in. In this case, a Coty IPO will provide a clear set of valuation data points for the marketplace, which in turn brings additional sets of eyes — whether private equity or venture capital — to the beauty space, which is a positive because it could bring additional capital into the marketplace.