Injectables chain Cosmetique pumps up its growth plans with $17.5m ASX listing

The ASX listing of parent company Stormeur aims to raise up to $7 million through the issue of up to 35 million shares at 20c each.

Cosmetique, which was founded in Perth by Dr Vivek Eranki in 2017 with his first clinic at Joondalup, has immediate plans to use the fresh capital to open four new clinics over the next 12 to 24 months.

Longer term plans include expansion into Asia, Indonesia, the Philippines and India to capitalise on a rising middle-class demographic where Cosmetique says growth in the cosmetic industry has been “exponential”.

The company may also seek out acquisition opportunities within the health and personal services sectors in Australia and offshore that can be integrated into the Cosmetique brand.

Over the past seven years, the Cosmetique injection and fillers clinic group has grown to 17 locations in Western Australia, NSW, Victoria and Queensland via “organic expansion” with no external fundraising.

The prospectus shows the company achieved pro forma revenue of $6.37 million in FY23 and pro forma EBITDA of a $397,450 loss which included about $271,000 in listed company expenses.

The latest FY24 half-year’s pro forma revenue of $3.44 million delivered pro forma EBITDA of $135,534.

While the core business remains cosmetic injectable treatments, Cosmetique introduced beauty and laser treatments to its service offering in March last year. While the company previously also provided cosmetic surgical services, these were discontinued in December 2019.

Eranki, who is chairman and managing director of parent company Stormeur, says the ASX listing will deliver a new phase of growth for the business.

“It has already become one of the country’s leading and most trusted cosmetic and injectables brands with 17 clinics across five states since I founded the business in 2017,” says Eranki.

“Listing the business on the ASX will enable the business to expand by raising funds to open new clinics, optimise existing ones and explore acquisition opportunities in wellbeing, health and personal services sectors including the addition of cosmeceuticals and skincare products complementary to the clinics' treatments.

“With new clinic sites already slated for 2025, the expansion will involve opening four new clinics in NSW and Victoria initially, with more planned for following years. Our aim is to be within 20 minutes’ drive from 90 per cent of the Australian population.”

The Stormeur prospectus notes that the Australian facial injectable market was estimated to be worth about US$2.77 billion ($4 billion) in 2023 and that the aesthetic segment dominated this sector with an 85 per cent share.

The company says the facial injectable market in Australia is expected to grow at a compound annual growth rate of about 19.3 per cent by 2030.

“The three most popular services across Cosmetique continue to be wrinkle relaxers, fillers and laser hair removal with patient data showing an increase in spend per treatment year on year with the wholesale price of product reducing in line with more competition in the supplier market,” says Eranki.

“Cosmetique sets itself apart in the market through its non-franchised model, ensuring consistent quality and standards across all locations.

“As Australia’s first accredited cosmetic clinic chain, it offers a wide range of high-quality services with a strong focus on the patient experience.”

Investment platform operator Liquidity Technology has been named lead manager of the IPO which closes on 14 October 2024.

Liquidity’s executive chair Bryant Mclarty says that while 2024 has been “relatively slow in terms” for IPO volumes, the timing of this offer leading into Christmas is “ideal”.

“Cosmetique boasts a proven business model run by a consistent and highly qualified management team that is taking a strategic approach to further growing the business,” says Mclarty.

“The core team will remain in place to guide the business strategy in place and to ensure that the quality and consistency the business and brand have become known for remains. It is also the only IPO of this nature in this industry.”

Mclarty notes major acquisitions that have occurred in the sector over the past seven years, including US private equity group KKR’s $650 million acquisition of Laser Clinics Australia in 2017 and Wesfarmers $180 million deal for Silk Laser Australia in 2023.

“But this is the first IPO in this space so we believe it will be competitive,” he says.

The Stormeur prospectus points out that Cosmetique was Australia’s first cosmetic injectables clinic to achieve accreditation under the National Safety and Quality Primary and Community Healthcare Standards through the Australian Commission on Safety and Quality in Health.

“We have always looked to adhere to the highest possible standards and invested in regular ongoing staff training across our network, while using technology to our advantage to reduce HR and administration costs without impacting the customer experience,” says Eranki.

“We have been able to attract and retain clients, both because we are priced competitively but offer a high quality and level of service and have a data base of clients which is now in excess of 90,000.

“All of this means we are extremely well placed to achieve growth in the future.”

Should the IPO hit its $6 million minimum capital raising target, Stormeur is planning to list on the ASX on 21 October 2024.

Eranki will hold more than 60 per cent of the company’s shares on issue after the IPO.