Coty Shareholders Seek to Raise Up to $1.1 Billion in IPO

Coty Inc., the maker of perfumes by Beyonce Knowles and Heidi Klum, is seeking as much as $1.1 billion on behalf of its shareholders in a U.S. initial public offering next month.

The company’s owners, including Joh. A. Benckiser and private-equity firm Berkshire Partners LLC, plan to offer 57.1 million shares for $16.50 to $18.50 each, according to a regulatory filing. Coty won’t get any proceeds from the IPO, which is set for June 12, data compiled by Bloomberg show.

Companies have generated almost $18 billion from IPOs on U.S. exchanges this year as the Standard & Poor’s 500 Index has risen to record levels, data compiled by Bloomberg show. The deal may set the stage for CDW Corp., HD Supply Holdings Inc. and other private-equity-backed companies to go public this year as owners look to unload assets they’ve held since before the financial crisis.

“Private-equity funds are looking to monetize what they’ve been holding onto for a period of time,” said Jeff Sica, who oversees more than $1 billion as chief investment officer of Morristown, New Jersey-based Sica Wealth Management LLC. “Either they do it now or they miss their window.”

Coty, based in New York, filed for the IPO in June of last year and pushed back plans to complete the sale until this year partly to give Chief Executive Officer Michele Scannavini time to adjust to the role, people familiar with the matter said in September. Scannavini took over Aug. 1, replacing Bernd Beetz.

Avon Overtures

The fragrance company filed for its initial offering after failing to gain control of Avon Products Inc.’s global door-to-door sales network through a takeover last year. Chairman Bart Becht had attempted the acquisition to find new customers for Coty’s cosmetics and more than double its annual sales from brands including Cerruti and Wolfgang Joop. Coty has sought to increase revenue by entering new regions and expanding distribution of its brands in emerging markets.

At the midpoint of Coty’s price range, the company’s common stock would be valued at $6.72 billion, including some shares that will be vested upon completion of the sale, data compiled by Bloomberg show.

Including debt of $2.53 billion and cash, Coty would have an enterprise value of $8.47 billion, about 11 times earnings before interest, taxes, depreciation and amortization of $788.8 million in the 12 months through March 31, excluding the effects of restructuring and acquisition-related costs, according to data compiled by Bloomberg.

Cosmetics Performance

Coty’s offering also comes after publicly traded peers such as Avon and Estee Lauder Cos., the maker of Mac cosmetics and Clinique skin-care products, have outperformed the broader stock market. Through May 24, Estee Lauder had gained 19 percent this year, while Avon had surged 64 percent, beating the 16 percent jump in the S&P 500, data compiled by Bloomberg show.

Estee Lauder currently trades at an enterprise value that is about 15 times Ebitda in the last year, and Avon trades at a multiple of about 14, data compiled by Bloomberg show.

Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley are managing Coty’s sale. Coty, which holds perfume licenses for brands including Calvin Klein and Marc Jacobs, was founded in 1904 in Paris by Corsican-born Francois Coty.