Korean cosmetics companies racing for IPO

Korean cosmetics companies are seeking to raise funds via initial public offerings (IPOs) for overseas expansion amid rising demand in China and other Asian markets.

Nature Republic, TonyMoly and several other cosmetics firms are making last-minute preparations to go public. Some small but promising cosmetics firms are also being encouraged to seek IPOs by securities companies looking to cash in on the trend.

Market observers said AmorePacific’s impressive performance last year triggered the race. The nation’s biggest cosmetics firm posted record sales last year, making its leader Suh Kyung-bae Korea’s second richest man in stock value, edging out Samsung Electronics Vice Chairman Lee Jae-yong and other billionaires.

Suh’s stock holdings were valued at $8 billion as of early April, while Lee’s stocks stood at $7.5 billion, according to the Bloomberg Billionaire Index.

Contenders believe they will be able to get sufficient financial ammunition through IPOs to compete in China and other major markets.

Many of them posted strong results last year, lifted by brisk sales in China and Southeast Asia where Korean pop culture is in vogue.

Nature Republic, a mid-tier cosmetics maker, is making last-minute preparations for an IPO in cooperation with Daishin securities. The company doesn’t rule out the possibility it will be listed on the Hong Kong stock market.

“What I can say at the moment is that we are making preparations for an IPO within this year,” a Nature Republic spokeswoman said.

Founded in 2009, Nature Republic runs nearly 680 stores here and 120 in 14 overseas, including Japan, the United States, Taiwan, Malaysia and Hong Kong. The firm’s sales last year were estimated at 250 billion won, up from 171 billion won in 2013.

“We will speed up overseas expansion with money raised by an IPO,” the spokeswoman said, adding the company sees big growth potential with China, the U.S., the Middle East and Latin America.

TonyMoly is another mid-sized cosmetics firm seeking an IPO. The company is working to be listed on the Seoul bourse by July. Its officials said the IPO, if launched successfully, will give TonyMoly momentum to facilitate its overseas expansion.

“A successful IPO will allow us to start business in China and many other strategically important countries,” a TonyMoly official said.

Founded in 2006, the company reported 205.1 billion won in sales last year, up 20.6 percent from 2013. It runs nearly 600 outlets here and hundreds of others in 20 countries, including the U.S. and Hong Kong. It aims to reach 400 billion won in sales this year on the back of increasing sales in China.

Other companies considering IPO include It’s Skin, Banila Co. and Hana Kos.

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