San Francisco Frontiers - Spanish beauty group Puig makes market debut

For the family-owned Puig Group, which has expanded rapidly into luxury goods, going public is a big step in its 110-year history which will allow it to compete with the giants of the sector such as Estee Lauder, Hermes, Kering and LVMH.

The move "marks the beginning of a new and exciting chapter in our company's long and proud history," chairman and CEO Marc Puig said in a statement.

"We will continue to build our portfolio of own brands with a focus on extending our leadership in prestige products and niche fragrances, while investing in our core markets and support our expansion in high-potential geographies," he added.

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

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

The stock rose by over 4.0 percent at one point before ending the day unchanged at its issue price.

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 Garcons.

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

- Controlling interest -

The flotation will take place in stages, the first of which raised 1.25 billion euros as planned 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 a total of around three 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' -

Puig raised the idea of an IPO 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."

Javier Cabrera, analyst at stockbroker XTB, said 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.

E.Jones--SFF