Puig aims for top-of-the-range €14bn valuation at IPO

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Spanish beauty group Puig is aiming for a top-of-the-range valuation of nearly €14bn in its initial public offering due on Friday, signalling strong demand in a deal set to be Europe’s largest market debut this year.

Any bids from investors coming in at below €24.50 per share — equating to a market capitalisation of €13.9bn — “risk missing” out on the offer, according to terms distributed by Puig’s bankers. Puig said this month that its expected valuation range was €12.7bn to €13.9bn.

Demand from investors is exceeding the size of the deal, according to those working on it, with the company aiming to sell up to €3bn of shares.

A strong listing for Puig would build momentum in Europe’s IPO market, after European private equity group CVC Capital Partners saw its shares jump on its first day of trading last week following a long-awaited IPO.

Puig’s bankers said the company would sell 21.5 to 23.7 per cent of its shares, with the rest remaining in the hands of the Puig family, which founded the company 110 years ago.Puig is expected to finalise its offer price on Tuesday, before its shares begin trading on Friday. JPMorgan and Goldman Sachs are leading the IPO.

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Puig’s launch on public markets comes at a complex time for the global luxury industry, where growth is slowing from a multiyear boom period during the pandemic. Chinese consumers, especially the middle class who helped fuel the industry’s recent expansion but are also more exposed to economic pressures, are buying less as the outlook in the country deteriorates.

Sales figures from the first quarter of the year showed a wide divergence in performance between top luxury groups, with those more orientated towards wealthy shoppers faring better. Puig, which owns luxury labels Rabanne and Carolina Herrera as well as a clutch of make-up and skincare brands, increased revenues 19 per cent on a like-for-like basis last year to a total of €4.3bn.

However beauty and fragrance, which makes up the majority of Puig’s business, has proved resilient with even squeezed shoppers still willing to splash out on more moderately priced lipsticks and perfumes. Companies such as LVMH’s beauty retailer Sephora and sector leader L’Oréal beat expectations at the start of the year, easing investor concerns about a slowdown in the US, beauty’s biggest market.

However, recent beauty IPOs have not been easy, with the market debut of German perfume retailer Douglas flopping in March, with shares still trading below their initial listing price.