Douglas Group

CVC-Owned Beauty Chain Douglas Aims for $1.2 Billion in Frankfurt Listing

 

Perfume retailer Douglas is embarking on a quest to secure up to €1.1 billion ($1.2 billion) through a listing in Frankfurt, as private equity firm CVC Capital Partners places its bets on a resurgence in European initial public offerings.

Douglas, a prominent fixture on European shopping avenues, intends to generate around €800 million by issuing new shares in the IPO and an additional €300 million through an equity injection from existing stakeholders, as disclosed in a statement on Monday. CVC is eyeing a valuation surpassing €7 billion for Douglas, as reported by Bloomberg News back in August.

Headquartered in Dusseldorf, Douglas has been steadily expanding its network, boasting over 1,800 stores across 22 countries while simultaneously enhancing its e-commerce presence throughout Europe. The company’s allure may attract investors seeking a dedicated investment in premium beauty products.

Its main competitor, Sephora, falls under the umbrella of LVMH, the French luxury conglomerate renowned for its ownership of brands spanning from Hennessy Cognac to Dior fashion.

This offering stands as a significant litmus test for investor appetite towards new equities, with potential to entice further companies to venture into the market.

The pace of new listings had slackened over the past couple of years, with the surge in interest rates dampening demand for IPOs. However, a nascent rebound is underway as central banks halt their rate hikes and stock markets soar to unprecedented highs. EQT AB intends to initiate the listing of skincare business Galderma in Switzerland as early as this month, according to Bloomberg News last week.

CVC does not intend to divest shares in this offering and will maintain an indirect majority stake in Douglas, which plans to utilize the proceeds to trim its debt load. The company aims to refinance its outstanding borrowings in conjunction with the IPO.

In a bid to enhance the prospects of a successful listing, CVC is contemplating offering to purchase new shares if external investor demand falls short, providing a “backstop” arrangement that could be funded through a loan backed by CVC’s Douglas shares, as reported by Bloomberg last month.

CVC acquired Douglas, with origins tracing back to 1821, from Advent International and the founding Kreke family in 2015 for approximately €2.8 billion.

Douglas is targeting mid-term sales growth of around 7% annually, accompanied by a profit margin of approximately 18.5%.

Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., UniCredit SpA, and UBS Group AG are spearheading the offering.