Spanish fashion and beauty brand Puig poised for IPO

The iconic Nina Ricci, Paco Rabanne and
Jean-Paul Gaultier labels make their market debut Friday as Spanish fashion
and beauty group Puig begins trading on the Madrid stock exchange.

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.(AFP)