PE-owned Adore Beauty targets $193m Australia IPO

The company will sell 39.9 million shares for A$6.75 apiece, giving it an expected market capitalization of A$635.3 million, according to a filing. Existing shareholders will offload 34 million shares through the offering, with Quadrant taking A$137.7 million off the table.

The private equity firm will retain a 32.5% stake, down from 57.8%. It has entered into a voluntary escrow agreement that prevents any sell-downs until the release of Adore’s results for the 2021 financial year. Adore’s co-founders, Kate Morris and James Height, will each hold 10.8% post-IPO.

Quadrant acquired a majority interest in the company in September 2019. It was the fourth investment in six months from the firm’s debut growth fund, which closed at A$400 million earlier in the year.

Founded in 2000, Adore was Australia’s first beauty e-commerce website. It initially offered only Australian brands, with Clarins becoming the first international partner in 2006. Adore also developed its product offering, introducing content and marketing services. Beauty IQ was launched in 2016 as an in-house editorial content platform featuring beauty news, reviews, and expert advice.

The company now stocks 11,000 products across 230 global and domestic brands. Its Australia and New Zealand websites attracted more than 18.5 million users in the 12 months ended June, with 590,000 people making at least one purchase.

Business development plans include launching a mobile app and introducing a loyalty program. Adore is also exploring private label brands – leveraging its customer knowledge, data and experience to fill gaps in the market – and entering new product verticals.

According to Frost & Sullivan, Australia’s beauty and personal care market generated A$10.9 billion in sales last year. It is expected to be worth A$12.9 billion by 2024. Online sales alone are projected to grow from A$797 million to A$3.2 billion as online penetration rises from 7.3% to 24.9%. The New Zealand market will hit NZ$2 billion ($1.3 billion) by 2024, with online sales of NZ$225 million.

Adore’s revenue reached A$121.1 million for the 2020 financial year, up from A$73.2 million in 2019. Over the same period, EBITDA rose from A$1.8 million to A$2.2 million, while the company swung from a net profit of A$1 million to a net loss of A$1.2 million. The loss was largely due to a more than twofold increase in marketing and advertising costs.

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• Topics
• Australasia
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• Quadrant Private Equity
• Australia
• TMT