CJ Olive Young takes first steps to an IPO

CJ Olive Young, one of the leading beauty retailers in Korea, is preparing to go public in 2022.

The company said Thursday it will soon start preparations for a pre-initial public offering (IPO) private placement of shares.

The health and beauty store’s parent company, CJ Group, has been selling off businesses like cable TV operator Hello Vision and coffee chain A Twosome Place.

Rumors had circulated that Olive Young would be part of that sell-off. CJ Group owns 55 percent of the company. Most of the remainder of the shares belong to members of the Lee family, the founding family of CJ.

An internal message from CJ Olive Young’s CEO Koo Chang-gun posted on the company’s online bulletin board Wednesday gave some information.

“From next year, Olive Young will embark on necessary preparation with an aim to be listed on the stock market in 2022. We’re also planning on securing pre-IPO investment,” he wrote in the message.

Koo said, however, that CJ Group’s ownership of the company will remain unchanged.

“The IPO will not affect CJ Group’s controlling stake, so I hope there are no unnecessary misunderstandings about this,” he wrote.

Money raised in the IPO will be used for investment like mergers or acquisitions in or outside Korea. Specifics of the IPO have not yet been decided, Olive Young said in a statement.

Analysts are interested in what Olive Young’s IPO means to Lee Sun-ho, CJ Group Chairman Lee Jae-hyun’s only son and heir apparent, who owns 17.9 percent of the company. Some analysts predict that after Olive Young’s IPO, Lee will cash out his shares to raise money to solidify his succession of his father.

Launched in 1999, Olive Young has more than 1,240 stores in the country and is a leader in the health and beauty industry, with a 50 percent market share by number of operating branches. The company does not disclose annual performance, but analysts estimate it generated more than 1.9 trillion won ($1.6 billion) in revenue and 87 billion in operating profit last year.

“As opposed to other health and beauty store rivals, CJ Olive Young saw online sales skyrocket during the Covid-19 pandemic, and saw second-quarter revenue slump merely 0.5 percent on year,” said Hana Financial Investment Analyst Choi Chung-uk in an Aug. 27 report.

“Olive Young would be able to receive a valuation of around 900 billion to 1 trillion won,” he added.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]