CJ Olive Young smooths path to successful IPO Beauty chain posts record earnings and carries out bonus issue to go public this year

Translated by Kim So-in 공개 2022-03-29 08:10:23

이 기사는 2022년 03월 29일 08:04 더벨 유료페이지에 표출된 기사입니다.

CJ Olive Young, the cosmetics chain of South Korea’s conglomerate CJ Group, posted record earnings last year, paving the way for its planned initial public offering (IPO).

The company recorded an operating profit of 138 billion won ($112 million) on revenue of 2.12 trillion won in 2021 on a consolidated basis. Its revenue increased by 13% and the operating profit by 38% year-over-year.

The beauty chain’s so-called omni-channel strategy has worked. Its online business accounted for 23% of the company’s total revenue, up 6% from the previous year. Its same-day delivery service accounted for 38% of its online orders in Seoul last year.

Based on the last year’s record earnings, the company is widely expected to accelerate its IPO process down the road. It hired Mirae Asset Securities and Morgan Stanley as its underwriters in November 2021. The company was esimated to be worth up to 4 trillion won during the presentation competition for the selection.

CJ Olive Young decided earlier this month to carry out a bonus issue - offer of free additional share to existing shareholders for every stock they hold. The beauty chain will newly issue some 10.8 million common shares, aiming to increase the number of outstanding shares and to promote a smooth sale of existing shares.

It is likely that Lee Sun-ho, the eldest son of CJ Group chairman Lee Jay-hyun and one of the beauty chain’s major shareholders, will use the IPO to build up financial resources to strengthen his control of the conglomerate.

CJ Corp is the largest shareholder of CJ Olive Young with a 51.15% stake. Lee Sun-ho owns 11.09% and his older sister, Lee Kyung-hoo, who has served as a CJ ENM executive vice president, holds 4.27%, respectively. Assuming that 10 million new shares will be issued during the IPO process, a stake held by related parties will drop to a 30% range, making them difficult to maintain management control.

The bonus issue will give the related parties more than a 50% stake in the company even after a fresh issue of 10 million shares. There will be more room for a sale by existing shareholders.

Lotte Rental also carried out a large scale bonus issue prior to its IPO in August 2021. The company freshly issued some 17.6 million common shares at a ratio of 1:1.5 in a move to increase its outstanding shares and provide financial investors an exit opportunity.

CJ Olive Young raised 414.1 billion won from Glenwood Private Equity in December 2020 in a deal that gave the Seoul-based private equity firm a 22.56% stake in the company at a 1.84 trillion won valuation.

Industry insiders expect the company to start the IPO process as soon as its audited financial statement is released as it aims to go public within this year. (Reporting by Joon-woo Nam)
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