Jessica Alba’s Honest Co. has set the terms of its introduction to Wall Street — and is looking at a valuation between $1.3 billion and $1.5 billion.
The stock is expected to be price between $14 and $17 a share. That’s the price that would be paid by the big institutional investors, who typically buy into an offering first. Once the shares are sold once, those investors turn around and start selling them on the open market, freeing the company’s valuation to change second by second as traders buy and sell.
The company plans to sell nearly 6.5 million shares in the offering, raising about $89 million, according to a filing with the Securities and Exchange Commission, which detailed the pricing on Monday. Honest said it would use the proceeds for general corporate purposes, including “marketing and direct-to-consumer advertising investments, innovation and adjacent product category expansion, international growth investment and organizational capabilities investments.” The clean beauty firm also left open the possibility that it could use the money to “acquire complementary businesses, products, services or technologies.”
The company’s largest backer, L Catterton, plans to sell at least 19.3 million in the offering, valued at as much as $262.6 million.
With other shareholder selling stock as well, the offering includes a total of 25.8 million.
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Given that the company clearly has the infrastructure in place to be public, it was also seen as a potential target in the SPAC frenzy, which has would-be acquirers looking to spend money and quick. But the pricing indicate that Honest is prepared to go public via an IPO.
Alba, Honest’s founder, chief creative officer and chair, does not plan to sell any shares in the offering, which will see her stake fall to 6.1 percent from 6.6 percent if the IPO goes off as envisioned in the paperwork. She owns 5.6 million shares company, which would be worth $96 million at the high-end of the offering.
Honest is run by chief executive officer Nikolaos Vlahos, who has a stake of 4.1 percent, but relies heavily on Alba’s image and social media reach.
The IPO registration statement describes Alba as “a globally recognized Latina business leader, entrepreneur, advocate, actress and New York Times bestselling author” who has 39 million social media followers.
“We believe that the success of our brand depends in part on our ongoing affiliation with Jessica Alba,” said Honest, which has a “likeness agreement” with Alba that she can leave at any time with prior written notice.
The company’s revenues increased 27.6 percent to $300.5 million, with 55 percent of that coming from e-commerce. Net losses narrowed to $14.5 million from $31.1 million in 2019, although gross margins increased 370 basis points to 35.9 percent of sales.
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