Rabanne-owner Puig shares flat in largest European IPO this year

After a two-year slowdown for IPOs, Europe has seen a stronger start this year for listings. However the market’s rebound has been halting.

The float, which values Puig at €13.9bn, was oversubscribed multiple times said the company behind perfume and make-up brands ranging from Rabanne to Charlotte Tilbury. The group had expected an valuation in the top range between €12.7bn and €13.9bn.

Puig raised €2.6bn in fresh capital by issuing 106.5mn shares. The total offering may increase to €3bn if an overallotment option is exercised in full.

Despite the muted reception, the listing in Barcelona and on other Spanish stock exchanges may still fuel 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.

“The key is that it ticks all the boxes,” said François-Xavier de Mallmann, chair of investment banking at Goldman Sachs who has worked closely with Puig on its IPO. “It’s a great company in a growth sector . . . we’ve been met with strong demand from all types of investors.”

Unlike other family-ran empires, Barcelona-based Puig plans to not pass control of the business on to the next generation. Chief executive and third-generation family member Marc Puig has said family-owned businesses face “traps” that outside investors and external scrutiny could help them avoid. He has said that the fourth generation — his children included — will have no role running the company.

Three members of the Puig family left the board last month while their role were filled by independent directors.

Still, members of the Puig dynasty are the biggest winners in the IPO. Puig’s bankers have 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. The family will also hold the majority of the voting rights, as only B shares were offered to external investors.

The flotation of the group, which bills itself as an “affordable luxury” player, comes at a complex time for the global luxury industry, where growth is slowing from a multiyear boom during the pandemic. Revenues 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. 

However beauty and fragrance, which makes up the majority of Puig’s business, has proved resilient with shoppers still willing to indulge in more moderately priced lipsticks and perfumes despite inflation and high interest rates. Companies such as LVMH’s beauty retailer Sephora and sector leader L’Oréal have continued to grow sales above investor expectations, easing concerns about a slowdown in the US, beauty’s biggest market.

But market reaction to new listings remains difficult to predict. German perfume retailer Douglas’ March listing flopped, while Swiss skincare company Galderma’s shares surged following its market debut that same month. 

Additional reporting by Adrienne Klasa