US Beauty Company Coty Is Selling New Shares In Paris

US Beauty Company Coty Is Selling New Shares In Paris
Reda Farran, CFA

5 months ago2 mins

Mentioned in story

What’s going on here?

US beauty company Coty said it’s planning to sell 33 million new shares, laying the foundation for a dual stock listing in Paris.

What does this mean?

The New York-listed cosmetics firm is hoping that a presence on the French exchange will improve its looks among beauty-focused investors. At the current price, the share sale would raise more than $370 million for the maker of CoverGirl, Rimmel, and Kylie Cosmetics. And that’s money the company says it’d use to pay down debt and expand the business. The firm’s been dealing with some unsightly issues: mostly heavy debt and some management churn. But things have become better-looking under the current CEO, hired in 2020 to makeover the business.

Why should I care?

For markets: It’s always had Paris.

Coty was founded in 1904 in Paris, so the dual listing would take the beauty brand back to its (perfectly dyed) roots. But there’s much more to this move than just homesickness. See, most of the world’s biggest luxury goods and beauty companies – LVMH, L’Oréal, Hermès, and Kering – are listed in the French capital. That means Europe has a wealth of analysts and investors with in-depth knowledge and appreciation of the industry. So, for Coty, the move means being able to tap into pools of investors with high sector expertise, which could lead to a higher valuation.

Coty has underperformed

The bigger picture: Beauty is looking good.

Coty’s share sale comes at a time when the industry is seeing a post-pandemic boom as customers splurge on smaller luxuries like fragrances and cosmetics. And the CEO of L’Oréal – the world’s biggest beauty company – says the change is more than skin deep. With the rise of the middle class around the world, an increased appetite for pricier premium products, and a customer base that’s stretching beyond women and young people, he’s predicting that the beauty market will grow to $427 billion by 2030, from $288 billion today.

Global cosmetics market growth
Source: Statista, L’Oreal
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