Adore Beauty in the eye of the shareholder, IPO beats expectations

Adore Beauty in the eye of the shareholder, IPO beats expectations

Following what Wilson Asset Management dubbed as "one of the year's hottest IPOs", Adore Beauty (ASX: ABY) has today landed on the ASX, witnessing a modest rise in its share price.

The company, which sells beauty and skincare products online, saw its shares up 10 per cent to their highest point today of $7.42.

Eventually the price settled at around $6.99, or approximately 3.56 per cent above Adore's launch price, giving the group a market capitalisation of approximately $636 million.

It is a good start for the company founded by James Height and Kate Morris (pictured), who are both sitting on ABY's board as directors.

The pair are leaving the CEO duties in the hands of Tennealle O'Shannessy, who prior to taking on the role worked in strategic global roles at job search platform SEEK (ASX: SEK).

Today's ASX listing is a world away from the company's humble beginnings in a garage in Melbourne 20 years ago, according to Morris.

"Starting with only a $12,000 loan from family, we grew carefully for many years, slowly building trust with beauty brands and consumers," Morris said in the company's Prospectus.

"Earning this trust has enabled Adore Beauty to build a growing base of loyal and passionate customers, which has in turn attracted unparalleled brand range within the Australian market."

In 20 years Morris and Height have managed to build a major e-commerce platform, attracting more than 18.5 million users across its Australian and New Zealand websites in FY20. As at June 30 Adore Beauty services more than 590,000 active customers from its Melbourne HQ.

At the end of FY20 the company reported a loss for the consolidated entity of $1.23 million, down from a $951,185 profit the year prior.

However, the company's revenue over the last financial year was substantially higher than in FY19, with Adore bringing in $121.1 million compared to $73.3 million year-on-year.

The ASX listing also appears to have watered down lead investor Quadrant Private Equity's stake in Adore, after the company contributed $40 million toward the group's $269.5 million IPO.

As such, Quadrant now controls 32.5 per cent of the Adore's shares, 13 months after it acquired a majority holding in the company.

In comparison, founders Height and Morris each hold 10.84 per cent of the company's shares.

As for the future, according to Adore's prospectus the company is looking to launch a new mobile app and expand into running a private label.

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