Avon Japan Working With Underwriter to Relist as Back in Profit

  • Keystone seeks at least 10 billion yen market value for Avon
  • Share offering may come as early as March 2018: Keystone

Japan’s Avon Products Co., formerly a unit of U.S. cosmetics company Avon Products Inc., is working with private equity investor Keystone Partners Co. and a large domestic securities company to relist in Tokyo.

Keystone may offer shares in the beauty products provider as early as March 2018 and hired an underwriter earlier in the year to work toward a listing on the Tokyo Stock Exchange, said Tomoaki Tsutsumi, the co-chief executive officer of Keystone Partners, in an interview Tuesday. Tsutsumi, who is also president of Avon in Japan, said much of the preparatory work for the listing will be completed by December. He declined to identify the securities company.

“M&A is needed for this business” to achieve growth, Tsutsumi said. “Without the ability to raise funds, M&A isn’t possible, so this is an industry where listing is really the right thing to do.”

Keystone Partners acquired Avon from a unit of TPG Capital in January, and the company is currently profitable, according to Tsutsumi, who declined to give an amount. Tsutsumi said that he is seeking to boost Avon’s profit to a level where the company can have a market value of at least 10 billion yen ($96.2 million). Avon Products Inc., which sold control of its Japanese business to private equity investor TPG Capital in 2010, split off its North American operations earlier this year and said it is moving its headquarters to the U.K.

Avon, founded in New York 130 years ago, set up a Japanese unit in 1968, according to Avon Japan’s website. While the Japanese business will continue to sell products directly to individuals, for which Avon became a household name in the U.S., it also needs to increase sales through other channels such as the internet, according to Tsutsumi.

Avon is targeting annual sales of 20 billion yen and a profit of 1 billion yen, Tsutsumi said. The Japanese firm posted four consecutive losses to 2010, according to filings at the time.

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