OLPX offered at $ 17- $ 19 per share later this week
Olaplex Holdings Inc. is a scientifically-based beauty company focused primarily on manufacturing luxury hair care products for the professional hair care industry. The company’s portfolio includes products for professional and home use, including shampoos and conditioners, and binding multipliers. The company owns 100 patents. Its products are based on scientifically substantiated designs aimed at treating damaged hair.
Olaplex recently filed an initial public offering (IPO) for the common shares held by its two institutional shareholders. The company submitted an S-1 registration form to the Securities and Exchange Commission (SEC) on August 27, 2021. It has since submitted two modifications to the original S-1, the last of which was submitted on September 28, 2021. Although an exact date for the IPO was not disclosed in the original S-1 or in the ‘Either of the amendments, it should take place this week. The shares will be listed on the Nasdaq Global Select Market level of the larger Nasdaq Stock Market under the ticker symbol “OLPX”.
A total of 67.0 million common shares of Olaplex are expected to be sold under the offer. The sellers of the shares are the two institutional shareholders of the company, which are Advent International Corp. and Mousse Partners Ltd. However, if the IPO’s underwriters sell more than 67.0 million shares, they have the option to purchase an additional 10.05 million shares. This option is often referred to as a “green shoe option”. The opening price of the shares is expected to be somewhere in the range of $ 17.00 to $ 19.00 per share, which could earn Olaplex a valuation of up to $ 12.3 billion. All shares are sold by existing shareholders and the company will not receive any proceeds from the sale.
After the completion of the IPO, investment funds affiliated with private equity firm Advent International, which acquired Olaplex in January 2020, would effectively own approximately 79.6% of the combined voting rights of the shares. ordinary Olaplex. Or Advent would own 78.2% of the combined voting rights if the underwriters exercised the repurchase option to purchase the additional 10.05 million shares. This will make Olaplex a “controlled company”, which will be exempt from certain corporate governance requirements, such as the requirement to have an independent board of directors or an independent compensation committee.
Key points to remember
- Olaplex is a luxury hair care company specializing in the supply of professional hair products.
- Olaplex will go public under the ticker “OLPX” later this week at an estimated price range of $ 17.00 to $ 19.00.
- The two institutional shareholders of the company together sell 67.0 million shares. The underwriters of the IPO have an option to purchase an additional 10.05 million shares in the event that the number of shares sold exceeds 67.0 million.
- Olaplex is targeting a valuation of $ 12.3 billion at the IPO, up from the $ 1.5 billion reported earlier this year.
- The company generated net income of $ 49.4 million on net sales of $ 152.1 million in its most recent quarter ended June 30, 2021.
Olaplex was founded by the company’s former President and CEO (CEO) Dean Christal. Christal’s mother worked as a licensed hairstylist and operated a home salon, and his father owned 26 beauty supply stores, giving the son a deep understanding of the hair care industry. Christal then launched Olaplex in 2014, starting with a line of just three products sold exclusively to hair care professionals. The company’s bond multiplication technology was an industry-first innovation, enabling hairdressers to repair damaged hair and improve hair care services for their customers.
Since the initial launch, Olaplex has further developed its product line, now offering a range of 11 different hair care products through professional, specialty retail and direct to consumer (DTC) channels. The aim of the company is to offer scientific products that deal with the treatment, maintenance and protection of hair. Its product portfolio, backed by numerous patents, creates barriers to entry for competitors in the hair care sector and related industries.
Olaplex is currently led by President, CEO and Director JuE Wong. Wong, who has extensive experience in the beauty and consumer industries, was appointed CEO in January 2020. She has expertise in managing fast-growing businesses. Tiffany Walden is Chief Operating Officer (COO), Chief Legal Officer, Secretary and Director, and Eric Tiziani is Chief Financial Officer (CFO).
Olaplex Financial Services
Olaplex provided recent financial results in its Second Amendment to its S-1 listing form. For the quarter ended June 30, 2021, the company’s net income increased nearly twenty-five times to $ 49.4 million compared to the same period a year ago. Net sales increased 175.3% year over year (YOY) to $ 152.1 million. For 2020 as a whole, net income fell by 35.5% despite revenue growth of 90.4%. Significant interest charges hurt Olaplex’s earnings.
The company’s operations and financial results have also been affected by the COVID-19 pandemic. The coronavirus outbreak in early 2020 disrupted Olaplex retail stores, hair salons, manufacturing and distribution. Many salons had to close or operate at reduced capacity, triggering a shift in demand from the company’s professional sales channel to its specialty retail and DTC channels. Olaplex said it has not seen a drop in demand for DTC channels even as restrictions have eased and lounges have started to return to more normal capacity.
The total book value of Olaplex, the difference between its assets and liabilities, as of June 30, 2021, was $ 627.4 million. Total cash and cash equivalents on the company’s balance sheet at the end of the period was $ 76.4 million, almost seven times more than at the end of 2020.
|Olaplex key financial data|
|Q2 FISCAL YEAR 2021||Q2 FY 2020|
|Net sales ($ M)||152.1||55.3|
|Net income ($ M)||49.4||2.0|
Source: Olaplex S-1 (Amendment n ° 2)
How much is Olaplex worth?
In June 2021, Bloomberg announced that Advent was exploring options to sell Olaplex and was targeting a valuation of at least $ 1.5 billion. Advent finalized its ownership of Olaplex in early 2020, but financial details of that transaction were not disclosed. Advent owns 89.3% of the outstanding shares of Olaplex. The other institutional shareholder, the private equity firm Mousse Partners, holds 6.8%.
In the upcoming IPO, Advent is currently targeting a valuation of $ 12.3 billion, which is significantly higher than the valuation given to Olaplex just a few months ago. This higher valuation is based on the proposed maximum opening share price of $ 19.00 disclosed in the Second Amendment to Olaplex’s S-1 filing and the total number of approximately 648.1 million. shares that will be in circulation after the IPO. Advent is offering 62.5 million shares for sale as part of the IPO and Mousse Partners is offering 4.5 million for a total of 67.0 million shares.
Key competitors of Olaplex
The size of the global hair care market is expected to grow from around $ 92.5 billion in 2020 to $ 105.1 billion in 2025. Olaplex faces a number of major rivals including L’Oréal SA (OR.PA), based in France, Unilever PLC (ULVR), based in UK, Henkel AG & Co. KGaA (HEN3), based in Japan, and Kao Corp, based in Japan. (KAO). Olaplex also competes with smaller independent brands and some of the company’s competitors have stakes in retailers that are its customers.
The bottom line
Luxury hair care company Olaplex submitted its IPO listing form in late August. A total of 67.0 million shares are offered for sale, plus an additional 10.05 million shares if the underwriters’ greenshoe option is exercised. The shares will be listed on the Nasdaq under the ticker “OLPX” at an expected opening price between $ 17.00 and $ 19.00. The IPO is expected to take place this week.