L’Occitane IPO raises €553m to invest in China expansion

By Simon Pitman

- Last updated on GMT

Related tags Hong kong Stock market

French cosmetics player L'Occitane says its recent IPO has helped it to raise HK$5.5bn (€553m) as part of efforts to target expansion in the fast growing China market.

The IPO was described as a ‘landmark deal’ by the Financial Times, underlining Hong Kong’s growing prominence in the global financial market, particularly as it as seen as a gateway to the China market.

The deal represents a total of 363.12m shares sold at HK$15.08 each, which values the company at approximately €2.2bn.

Trading was described as robust

The company received IPO approval from the Hong Kong stock exchange’s listing committee at the end of April and since trading opened in the shares demand proved to be robust.

When the initial flotation was announced analysts had estimated​ that the offering would raise between $400m (€296.8m) and $600m, putting the amount raised towards the top end of expectations.

Before the offering took place the company said it believed the strength of its brand image and growth prospects in the Far East would result in a better stock market rating than if it had held the IPO in Europe.

L'Occitane wants to build on strong Hong Kong presence

L’Occitane already has 15 retail stores in Hong Kong, a special administration of the People’s Republic of China, which strategically places it as a gateway to the growing market for beauty products in China.

China is a major focus for natural skin care players such as L’Occitane because consumers there are particularly focusing on luxury and natural skin care products, together with upmarket hair care products.

Retail sales of cosmetics in the country for the period from January to December 2009 grew 16.9 per cent to CNY74.0bn ($8.5bn), a figure that has consistently registered double digit growth for the past two years.

Targeting expansion in developing and mature markets

As well as the China market, L’Occitane says it hopes the money raised from the IPO will also help it to expand into other big growth markets, including Brazil and Russia, as well as helping to tackle mature markets such as the US and Japan.

The company was set up in Provence, south of France in 1975 and currently has over 1,500 retail locations in more than 80 countries worldwide, with France, Japan and the US being its biggest markets.

The company said that for the year ending March 2009 it generated sales of approximately €537.3 million and profit of €66.4m.

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