Coty to explore dual Paris listing

Cosmetics maker Coty is exploring a dual listing in Paris in what would be a return to the city where the perfumer was founded to tap pools of European investors plugged into the fashion and beauty industries.

Investment group JAB, which controls the group and is backed by the German billionaire Reimann family, has signed off on management examining a new listing to add to its current one on the New York Stock Exchange, where it went public in 2013.

JAB’s backing for a potential move is a sign it thinks Coty is on sounder financial footing after years of losses, management churn and woes caused by high debts racked up during an acquisition spree.

Chief executive Sue Y. Nabi, a beauty veteran who was hired in 2020 as the fifth boss in five years, has improved operations and helped drive a share price recovery to $11.70 from below $4 when she arrived.

Paris is home to the sector leader and world’s biggest beauty company L’Oréal, in addition to luxury groups such as LVMH and Kering for whom Coty is a major supplier of perfumes. The hope is that a Paris listing will allow Coty to attract more investors in Europe since many funds have mandates that limit how many US shares they can own.

“The board’s interest in exploring a potential listing on the Paris Stock Exchange has been made possible thanks to the progress Coty has made under [Sue Y. Nabi]’s leadership”, said Peter Harf, Coty’s chair and head of JAB.

Under Nabi, the company has expanded into high-end products to target a fast-growing segment of the market while seeking to turn round its problem-plagued mass-market cosmetics business. Last year, it reported its first profit in half a decade and the company said it was on track to achieve a leverage ratio of three times earnings before interest, tax, depreciation and amortisation by the end of this year.

Coty said Nabi’s terms of employment, which initially ran until 2023, had now been extended until 2030. Under her previous contract, in addition to a base salary of €3mn a year, the chief executive was granted 30mn company shares that vest over three years and were not linked to any performance-related targets.

“I am grateful to the board for their continued support and trust, and delighted to have the opportunity of leading Coty through this next chapter of growth and value creation,” Nabi said.

Despite recent progress at Coty, it remains a laggard when compared with Paris-based L’Oréal, which has reported several years of record profits and recently closed a $2.5bn deal to buy Australian skincare brand Aesop amid stiff competition. Coty is dwarfed by its French competitor, whose market capitalisation has grown to €226bn ($249bn) against Coty’s $9.9bn.