On its first day of dealings, Revolution Beauty (REVB ) said it has successfully executed a £300 million placing as part of its initial public offering on London’s junior AIM market.
The global mass beauty and personal-care company, which sells products that are primarily vegan (around 70%) and 100% cruelty free, said it has placed 69.2 million new ordinary shares at a price of 160p, leaving the firm with a market capitalisation of around £495m.
Revolution, which now has over 300 million sale shares, said its proceeds are expected to rise for shareholders while new shares are also expected to raise proceeds of £110.7 million. The funds are expected to provide around £20m of cash immediately following today’s IPO.
Adam Minto, who is Co-founder and Chief Executive Officer of Revolution Beauty, commented, "Today is an extremely proud day for all associated with our business and, in particular, our 220 employees who have worked hard to get us where we are today.”
He added, “Admission to AIM is an extraordinary stage in our journey and reflects our exceptional growth to date, global presence and significant prospects.”
In recent weeks, Minto, has described the Company’s upcoming listing as “a significant milestone in the company’s development. Specifically, he said it will provide the Group “with a solid platform to execute its exciting growth plans and take advantage of the significant opportunities for global expansion in a compelling growth market.”
He said today, “We began eight years ago to start a revolution in beauty and in order to ensure high quality, cruelty free cosmetics and skincare are affordable for everyone.”
The Group believes a London listing will provide the business with the permanent capital needed to support its long-term growth strategy and to enhance its profile and visibility.
Today’s IPO will also provide the firm with the means to incentivise management and staff, strengthen its balance sheet, as well as to realise value for all institutional shareholders.
Since launching in 2014, Revolution has seen rapid growth with a reported CAGR of 99% from FY14 –FY19 and has generated revenues in the year to 31 December 2020 of £137.5m.
According to data reported by City A.M, Revolution Beauty, which partners with Superdrug and Boots, generated £157.6m in revenue in the fourteen months to 28 February 2021. The Group holds a retail footprint of around 11,000 doors across the UK, USA and internationally.
"There remains a considerable opportunity and we are now in the best possible position to broaden our global reach and deliver against our significant growth prospects in a beauty market that has very compelling dynamics for an agile and inclusive business like ours. We welcome our new investors and look forward to the future with excitement,” said Minto.
Since its founding in 2014, by CEO, Minto and Executive Chairman, Tom Allsworth, the Kent-based Company, Revolution Beauty, has expanded to serve its customers in more than 140 countries and to date, it now has partnerships with retailers in 45 countries.
In particular, the multi-brand firm’s digital strategy is largely supported by its social media following of more than 6.3 million while its business model is focused on establishing its brand as a ‘first to mass’ innovator, with new affordably priced products launched on a weekly basis.
To date, Revolution has launched collaborations with several beauty influencers, including on the social media platform TikTok with its current campaign reaching over 4.2 billion views.
During the course of 2020, the Company signed a significant number of new retail and digital partners and going forward, it expects to announce a number of new partnerships in 2021.
Looking ahead, the Company told investors that it continues to develop new products as it reacts to the latest consumer demands which it said will provide opportunity for growth with new and existing products, and also through entering into new product categories.
To date, Revolution has several products and ranges already in development and planned for launch including the Group’s RevolutionMAN which is expected to launch in 2022.
Commenting on its market position, Minto said: "Our differentiated business model brings together both online and retail revenues, while our manufacturing and consumer feedback strategy enables us to bring new products to market quickly. This means that Revolution Beauty can quickly respond to the megatrends driving the global mass beauty industry.”
Tom Allsworth, Co-founder and Executive Chairman of Revolution Beauty also commented: "The journey that Revolution Beauty has been on since Adam and I founded it in 2014 has been one of significant upwards trajectory. Our IPO marks the continuation of that journey, and we are looking forward to building on the incredible success that we have already achieved for the benefit of all of our stakeholders, including our new shareholders."
Jupiter Asset Management has already entered into a cornerstone investment deal with Revolution, agreeing to subscribe for £90n of the placing or just over 18% of the company.
What the analysts are saying
Looking ahead, analysts at Zeus Capital have forecasted that there will be ‘significant further growth opportunities’ for the company, ‘including Amazon which presents a huge, untapped growth opportunity, and expansion into Asian digital retailers, such as TMallin China,’ it said.
‘Revolution’s operating model can take a product from concept to shelf in as little as 16 weeks (versus 18-24 months for legacy operators). Digital partnerships have also allowed it to rapidly scale its online presence and its current partners provide the business with access to more than 100 million active customers,’ said analysts at Zeus Capital in a research note.
Looking ahead, analysts at Zeus Capital highlighted to investors that Revolution Beauty’s addressable market, which includes mass colour cosmetics, mass skincare, mass haircare, mass fragrance and mass sun care, is forecast “to continue to grow at a CAGR of 6.0% from FY20A to FY2025E, recovering sharply from the disruption of the COVID-19 pandemic.”
The broker has set a proposed valuation range of £430m -£490m. It said revenue CAGR of 25.6% over its forecast period to FY24 “reflects share gain in existing channels and markets through ongoing growth in digital beauty, the post-pandemic recovery of store retailing potential for selective store expansion with key retailers, as well as brand and category expansion, underpinned by the stable and resilient cosmetics market backdrop.”
In a new Q&A with Vox Markets, Revolution Beauty discuss its upcoming IPO. CEO, Adam Minto, talks through the principle behind the key USPs and the firm's go-to market strategy.
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