Olaplex Holdings, Inc. 

IPO Offering Details: Olaplex Holdings, Inc. (Proposed NASDAQ Code: OLPX) is mainly engaged in the business of cosmetics, perfumes, & other toiletries preparations. The company’s products are sold via a global omni-channel platform serving the specialty retail, professional, and direct-to-consumer channels.

• Olaplex Holdings had informed the market regarding its plans to go public in the U.S. The company has upsized and priced an initial public offering of its common stock of 73,700,000 shares at a public offering price of $21.0 per share, up from an earlier offer of 67,000,000 shares at a price range of $17-19 per share.
• Notably, Olaplex Holdings will not be eligible to receive any proceeds from the offering as the entire sale of shares in the IPO are by the existing shareholders.
• After deducting underwriting discounts and commissions, the underwriters have been granted a 30-day option to purchase up to an additional 11,055,000 common shares.
• The company is expected to be traded on Nasdaq Global Select Market under the ticker symbol “OLPX” on September 30, 2021, and the offering is expected to close on October 4, 2021, subject to customary closing conditions.

As per the filings dated September 29, 2021, investment funds associated with Advent International Corporation will own ~79.6% in Olaplex post IPO offering. As a result, Advent will be the “controlled company” and will continue to influence Olaplex post the offering.

Current Investors: Goldman Sachs & Co. LLC, Barclays, and J.P. Morgan, Morgan Stanley, act as joint lead book-running managers for the IPO. Whereas, BofA Securities, Evercore ISI, Jefferies and Raymond James are playing the role of joint book-running managers.

Past Performance-Highlights:

• Increase in Revenues: The company reported total net sales of $270.2 million in 1HFY21 versus $99.6 million in 1HFY20, primarily due to volume growth across all channels, increased velocity of existing products, the launch of new products, and the addition of new customers.
• Rise in Gross Profit: The company posted a gross profit of $214.1 million in 1HFY21 versus $42.5 million in 1HFY20.
• Cash Details: As at 30 June 2021, the company had a cash balance of $76.4 million. As at 31 December 2020, the cash balance stood at $10.96 million.

Revenues Highlights; Analysis by Kalkine Group

Key Risks: The company is exposed to changes in Government policy and stringent regulatory measures. Further, stiff competition, pricing pressures, and foreign exchange risk, and interest rate risk remain potential headwinds.

Summary/Outlook: The company remains on track to deploy a flexible and robust supply chain, intended to support long-term growth. In doing so, the company strives to leverage strong partnerships with its co-manufacturers and distributors to create an expansive supply network. Notably, an asset-light business model is expected to aid the company to generate strong free cash flow. To conclude, with this listing, the company could become one of the largest hair care brands in the US.

Note: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.