(Bloomberg) -- Puig Brands SA kicked off its €2.6 billion ($2.8 billion) initial public offering, set to be the largest in Europe so far this year, as the Spanish fragrance and cosmetics company seeks to capitalize on growing momentum in the region’s equity markets.

The Barcelona-based company and its founding family plan to sell Class B shares at €22 to €24.50 each, Puig said Thursday in a filing with the Spanish securities regulator.

Puig, whose brands include Jean Paul Gaultier, Rabanne and Carolina Herrera, would have a market value of as much as €13.9 billion after the offering, according to terms seen by Bloomberg. 

The company will sell enough new shares to generate about €1.25 billion in proceeds, while the Puig family is offering stock to raise around €1.36 billion. The family may also sell as much as €390 million worth of additional shares in an over-allotment option.

The number of shares of both the main offering and the over-allotment will be determined by the final price of the IPO.

Puig’s implied valuation is higher than that of fragrance company Coty Inc., but a long way off from beauty industry behemoths like L’Oreal SA or Estee Lauder Cos.

In dollar terms, the listing surpasses Galderma Group AG’s 2.3 billion Swiss-franc ($2.6 billion) sale last month as Europe’s largest so far this year.

If successful, Puig’s offering is expected to pave the way for more listings. Companies have announced $7.5 billion of IPOs this year in Europe, up 88% from the same period last year.

Yet stock market debuts have been mixed recently. Galderma shares have soared since the skin-care company listed, while German perfume retailer Douglas AG has tumbled. 

Puig’s listing will be watched closely by Spanish candidates to float such as clothing retailer Tendam and Hotelbeds, which reportedly delayed its IPO until after the summer. Elsewhere in Europe, private equity firm CVC Capital Partners plans an offering in Amsterdam.

Family Business

Puig was founded as a perfume company in 1914 by Antonio Puig. The bulk of its growth over the 20th century came from the distribution of well-known foreign goods by firms like Max Factor, and the production of perfumes under license for other brands.

While expanding its fashion and skincare offering, Puig has focused in recent years on a segment known as “niche fragrance” by buying L’Artisan Parfumeur, Penhaligon’s and Byredo, and launching designer Dries Van Noten’s perfume line. The conglomerate also owns the latter’s fashion business, as well as Rabanne, Carolina Herrera, Nina Ricci and Jean Paul Gaultier. 

The company is still led by the third generation of the founding family. Marc Puig Guasch is chairman and chief executive officer, while his cousin Manuel Puig Rocha is vice chairman. The family will maintain a majority stake and hold more than 90% of the voting rights, according to the filing, thanks to its ownership of Class A shares, which have five votes each versus one for the Class B stock. 

Puig’s revenue rose 19% last year to €4.3 billion, with its makeup and skincare businesses — albeit much smaller than fragrances and fashion — up 23% and 31%, respectively. The company’s profit margin increased to 20% last year from 17.7% in 2021. 

Puig said it would use the proceeds to refinance the acquisitions of additional shares in Charlotte Tilbury and Byredo it agreed in 2024, and help the portfolio grow further. The IPO could improve the group’s position in growing its market share via mergers and acquisitions and license deals, Bloomberg Intelligence’s Andrea Ferdinando Leggieri and Deborah Aitken wrote in a note last week. The funds could also help Puig revamp historical brands and expand in new categories as well as geographical locations such as Asia, currently the company’s smallest market.

Still, the IPO comes amid signs from competitors that consumer demand for beauty products is cooling. Shares of Ulta Beauty Inc. on April 3 tumbled the most since March 2020 after executives signaled demand was slowing, weighing on the shares of peers as well.

The share sale begins Friday and will run through April 30, with the first day of trading set for May 3 on the Madrid Stock Exchange under the symbol PUIG, according to the terms. Puig announced its intention to list, including the amount the company planned to raise, on April 8. 

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading the IPO, with Bank of America Corp., BNP Paribas SA, CaixaBank SA and Banco Santander SA as joint bookrunners.

(Updates with over-allotment in the fourth paragraph.)

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