German perfume giant Douglas is actively considering a public listing in the first quarter of the year, sources familiar with the matter reveal. This move could signify a crucial test for European IPOs in 2024.
Backed by private equity firm CVC, Douglas is gearing up to unveil earnings, encompassing the lucrative Christmas season, in the upcoming weeks. The company eyes a listing on the Frankfurt Stock Exchange by March, contingent on favorable market conditions, according to insiders requesting anonymity.
Insiders suggest that the anticipated IPO might attribute a valuation of up to 7 billion euros ($7.65 billion) to the CVC-owned retailer. However, caution is advised, as a final decision on timing is pending, and IPO plans may experience delays. Douglas refrains from commenting on the matter.
Proceeds generated from the IPO are earmarked for debt reduction. As of September, Douglas carries a net debt of 3.4 billion euros, including store leases, equivalent to approximately 4.7 times its adjusted core earnings.
Under the leadership of CEO Sander van der Laan, Douglas achieved a remarkable 12% surge in sales, surpassing 4 billion euros for the fiscal year ending September 2023. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) reached around 726 million euros.
This potential listing comes after a subdued period for initial public offerings in the past two years, influenced by escalating debt costs and geopolitical uncertainties that tempered enthusiasm for new stock listings. However, optimism increased towards the end of 2023 as the U.S. Federal Reserve signaled a potential reversal of interest rates in the new year, providing a positive backdrop for new listings.
Beyond Douglas, bankers are hopeful that other European companies, including Renault’s electric vehicle arm Ampere and Swiss skincare group Galderma, will join the market in 2024, setting the stage for a broader revival in deal activity.