Adore Beauty to Raise $269.5 Million for IPO

Stockbrokers, Morgan Stanley and UBS, have been appointed as the Co-Lead Managers to the proposed IPO for Adore Beauty. The brokers are seeking bids at 3.9-times the forecast 2020 revenue.

If successful, Adore Beauty would have the largest IPO in Australia so far in 2020. In 2019, Quadrant Equity acquired 60 percent of the online retailer. With the IPO, the firm is expected to hold approximately 32,.5 percent of the shares.

“Well this has been one hell of a lockdown project!” Kate Morris, Co-Founder and Executive Director of Adore Beauty, wrote on LinkedIn.

“Twenty years ago in my garage, I would never, ever, EVER have dreamed that Adore Beauty would make it onto the ASX,” she said. “I am so very proud of what we have built, and of my team, and of what this means for women in business. Adore is going to be the first ASX listing of its size with a woman founder and woman CEO. (Not to mention CFO, and COO, and majority women on the board.) They say that “if you can’t see it, you can’t be it” – well clearly that’s not entirely true (!), but I hope this has broken a hole in the glass ceiling for many more women to come through.”

Adore Beauty launched in 2000, co-founded by Kate Morris and James Height in a garage in Melbourne. As the first beauty e-commerce platform, it has become one of the leading household names in the country.

In FY20, Adore Beauty had 18.5 million website users across Australia and New Zealand, and in June 2020, the retailer had 590,000 active customers from its headquarters in Melbourne.

With its IPO, the retailer aims to increase its brand awareness to 80 percent; as of 15 June 2020, its brand awareness is measured to be 47 percent.

Furthermore, Adore Beauty aims to launch a Mobile App to deliver a ‘content-first focus’ with a highly personalized experience for its customers.

According to Frost & Sullivan, the Australian beauty and personal care market in Australia is estimated to generate sales of $10.9 billion in CY19, both online and in-store.

Kate Morris and James Height’s combined stake in Adore Beauty will be reduced to 21.6 percent from 38.6 percent with the IPO. The Co-Founders are estimated to make a cool $45.9 million each by selling 40 percent of their shares with the offer.

According to the prospectus, Adore Beauty’s revenues are forecast to increase by 76 percent in CY20 to $158.2 million, with EBIDTA to double to $6.4 million, and pre-tax profit to rise 153 percent to $5 million.

Throughout the pandemic, the retailer’s revenue rose 65.5 percent to $121.1 million as a record number of customers flocked to the website.

“In recent years, we have invested significantly in building out our executive team to drive Adore Beauty’s continued growth,” Morris said in the prospectus. In August 2020, Adore Beauty secured Tennealle O’Shannessy as its new CEO. O’Shannessey previously held the role of Managing Director of the Americas at SEEK.

“In particular, I would like to make special mention of Adore Beauty’s CEO, Tennealle O’Shannessey. Tennealle brings with her more than 20 years of experience, most recently including nine years with SEEK in strategic global roles,” Morris explained. “While James and I look forward to remaining active within the business, we believe Tennealle is the perfect person to lead the team during the next phase of growth for Adore Beauty.”

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