TA Associates-backed Marc Anthony prices IPO to raise $278 mln

Beauty-products brand Marc Anthony has priced its recently filed initial public offering in Canada.

The Toronto company expects to raise about $126 million of treasury proceeds by selling common shares at $14 to $16 per unit, the updated prospectus shows. It also expects to secure about $116 million to $132 million in secondary proceeds.

The greenshoe option, if fully exercised, will increase secondary proceeds to as much as $152 million to $174 million, which at the lower price point would bring total proceeds to about $278 million.

Bloomberg earlier reported Marc Anthony was looking to raise as much as $250 million.

Founded in 1995 and led by hair stylist Marc Anthony Venere, Marc Anthony develops, markets and distributes hair-care and body-care products, such as shampoo, conditioner, hair-styling products, treatments, body wash, and body and hand lotion.

Launching its first product in Canada, the company built a clientele that reportedly includes multiple A-list celebrities, among them Kate Bosworth and Justin Bieber. It today sells in more than 25 countries.

Marc Anthony operates in the US$465 billion global personal-care industry, competing primarily in the US$75 billion hair-care category.

The business had pro-forma revenue of US$75.7 million in fiscal 2017. That compares with revenue of US$53.8 million two years earlier, a compounded annual growth rate of 18.6 percent.

It is now targeting revenue of US$145 million to US$160 million in fiscal 2020, which would represent a CAGR of about 24 percent to 28 percent.

The company expects to do this by leveraging demand trends in the personal-care space, driven partly by the rising purchasing power of millennials.

It will also deepen retail and distribution partnerships, take advantage of cross-selling opportunities, and enter new markets.

Marc Anthony will also pursue other growth initiatives, such as acquisitions. It did this earlier in 2018, buying Cake Beauty, a Toronto beauty brand specializing in natural, vegan and cruelty-free products.

The treasury proceeds will be used to retire debt, the prospectus says.

Marc Anthony was acquired in 2016 by U.S. private equity firm TA Associates, reportedly for about $230 million.

With the IPO’s close, TA Associates’ ownership stake is expected to be reduced to about 32 percent, or 28 percent if the greenshoe option is fully exercised.

The company plans to list its shares on the Toronto Stock Exchange under the symbol MAV.

CIBC Capital Markets, RBC Capital Markets, Jefferies Securities, BMO Capital Markets, National Bank Financial, Raymond James and Canaccord Genuity Corp are the underwriters.

Marc Anthony is one of five Canadian PE-backed companies to announce or complete an IPO since January.

A fourth materialized in early June when Montréal packaging solutions provider IPL Plastics priced its issue at a $180 million target, not including the greenshoe option. The company is backed by Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ.

Last month Tacora Resources, an iron ore mining and processing business backed by Proterra Investment Partnerspriced its IPO to secure as much as $144 million.

And earlier in 2018, Pinnacle Renewable Energy, an industrial wood-pellet maker backed by ONCAP, closed its IPO, raising $172 million, while Ceridian HCM, a human-resources-software provider backed by Thomas H. Lee Partners and Cannae Investors, took US$462 million from its public debut in Canada and the United States.

PE Hub Canada in December estimated a dozen Canadian PE- and venture-backed IPOs raised $2.3 billion in 2017.