Industri Kapital lines up Oriflame IPO

Private equity firm Industri Kapital has announced the planned IPO of portfolio company Oriflame in what would be the first flotation in the Nordic region for 18 months.

Oriflame, the fast-growing cosmetics company, has announced a flotation on the Stockholm Stock Exchange in a move that could provide a boost to owner Industri Kapital’s current fundraising.

The IPO will comprise 20,769,500 Swedish Depositary Receipts (SDRs) – including 3,100,000 new SDRs, representing 35 percent of Oriflame’s total shares. It will aim to raise SEK500 million depending on the final offer price. The price range has been set at SEK165 to SEK200 per SDR, and the subscription period will run from 11 March to 23 March 2004, with the first day of trading on 24 March.

Industri Kapital took Oriflame private from the London Stock Exchange in 1999. In 2003, the firm grew revenues by 20 percent to €652 million, while operating profit was up 19 percent at €114 million and net profit after tax was €89 million, equivalent to a net profit margin of 13.6 percent.

A direct seller of cosmetics, Oriflame has operations in 54 countries offering a range of skincare, fragrances and colour cosmetics. Its products are marketed through a sales force of over 1.4 million independent sales consultants. The company was founded in 1967 by Jonas and Robert af Jochnick, who remain members of the board. The af Jochnick family and the Industri Kapital 1997 fund will retain a combined stake of 42.9 percent following the flotation.

“Oriflame has a strong track record of profitable growth, reflecting our powerful combination of cosmetics and direct sales,” said Oriflame CEO Sven Mattsson. “This has been driven by our focus on fast growing emerging markets and a dynamic product segment allowing us to build strong market positions.”

The last attempted private equity-backed IPO in the region fell through in December 2003 when EQT pulled an offering on behalf of Swedish refrigeration business Dometic due to insufficient investor appetite.

Industri Kapital is currently raising its fifth fund, which held a first closing on €500 million in October 2003. The fund is the successor to the IK 2000 fund, which closed on €2.1 billion in November 2000. Last month, Industri Kapital sold its remaining 25 percent stake in Stockholm-listed kitchen manufacturer Nobia, achieving a money multiple of nearly eight times according to market sources.