Bare Escentuals launches IPO

Published: 4-Oct-2006


Mineral cosmetics specialist Bare Escentuals has announced the terms of its IPO (initial public offering).

The company will offer 16 million shares of common stock at $15-17 each. Goldman Sachs and CIBC World Markets are the lead underwriters and will have the option to buy an additional 2.4 million shares to cover over-allotments.

Bare Escentuals reported revenues of $299m in the 12 months ended 31 March 2006 and net income of $38m. Net sales rose 66% in the first half of 2006 to $186m, operating income more than doubled to $25.3m and gross profit margins came in at 72%.

The company hopes to raise a further $288m through the IPO, which will be used to offset some of the debts it raised to pay out special dividends totalling $577m to its private equity investors Berkshire Partners and JH Partners and company executives. Even then, analysts estimate the company will have a negative worth of $402m.

The precise timing of the IPO has not been disclosed, but with interest expenses wiping out a third of Bare Escentual's operating income in the first half of 2006, sooner would presumably be better than later.

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