Industri Kapital portfolio company Oriflame Cosmetics has returned to the public markets and successfully floated on the Stockholm Exchange’s O-List making it the first offering on the Swedish stock exchange for 18 months. Industri Kapital has made a return of 5.8 times its original investment realizing €225m on exit. The price of the IPO was set at the top end of the price range at SEK190 per share and the base offering of 20.8 million Swedish Depositary Receipts (SDRs) was over 10 times oversubscribed. This corresponds to a total market capitalization for Oriflame of SEK11,275m.
As a result of the strong demand Industri Kapital increased the number of SDRs included in the offering by 3,115,425 from a base size of 35% to 40.2% of the total share capital and votes. The increased offering size comprises a total of 23,884,925 SDRs consisting of 20,784,925 existing SDRs and a new issue of 3,100,000 SDRs. The size of the total offering is now SEK4,538m. The total number of SDRs in Oriflame after the offering will be 59,341,429. Following the offering the af Jochnick family and Industri Kapital 1997 Fund will own 24.1% and 18.8% of the share capital and votes respectively and Oriflame management will own around 5.6% of the share capital and votes. Industri Kapital’s current stake in the company is worth around €230m.
This is the second time Oriflame has gone down the IPO route. Industri Kapital backed the business in 1999 in a public-to-private transaction when it delisted the company from the London Stock Exchange. Industri Kapital’s 1997 Fund paid €90m for a 39% stake in the company.
Oriflame is a manufacturer of high quality skin care, fragrances and colour cosmetics. Its products are marketed through a sales force of over 1.4m independent sales consultants. Since the buyout in 1999 the company’s sales have doubled and operating income has grown by 170%. In 2003, the company’s revenues increased by 20% to €652m, operating profit increased to €114m and the company generated a net profit after tax of €89m, equivalent to a net profit margin of 13.6%.
There have been a handful of companies seeking to raise funds from the public markets of late signaling a long-awaited recovery of the stock markets. Last month Industri Kapital cashed in on its remaining 25% stake in Stockholm-listed kitchen manufacturer Nobia, achieving a reported return of almost eight times. The floatations should provide a boost for the firm’s fund raising efforts. Industri Kapital is currently seeking €2.5bn for its fifth fund, which held a first close in October at €500m. The fund is the successor to the €2.1bn IK 2000 fund.