* Largest producer of retailer-branded diapers in Europe
* Aims for dividend of 35 to 40 pct of net profit, from 2015
* Revenues up 7.2 pct per year on average over past 10 yrs
(Adds details on dividend policy, growth, management comments)
By Robert-Jan Bartunek
BRUSSELS, June 11 Belgian diaper maker Ontex
plans to raise up to 620 million euros ($844
million) in one of Europe's biggest new stock market listings
this year to cut its debt and allow its private equity owners to
cash in part of their investment.
Ontex said the listing on Euronext's Brussels stock
exchange later this month would offer investors growth from
emerging countries' take-up of its diapers and feminine care
products and an expanding market for adult incontinence in the
The number of initial public offerings (IPOs) in Europe has
picked up in recent months, spurred by the improving economic
outlook, prompting investors to get more choosy about where they
put their money.
About half of Ontex's revenue comes from diapers, a third
from adult incontinence products and 13 percent from feminine
Ontex said it expected this mix to remain broadly stable, as
it entered emerging markets with higher birth rates, while
ageing western Europe would need more incontinence products.
"Once you start to use them you don't stop until the last
day of your life. It's a growing opportunity building like a
snowball," said Chief Executive Charles Bouaziz.
The company, which makes most of its money supplying
retailers such as Tesco, Carrefour and Aldi
with store-label products, also said it saw 50 percent as a
benchmark share of the overall market for private label
"If you just project countries like France or Germany and
some of the Western European countries to get to (Denmark's 50
percent) level that provides us with a terrific growth
opportunity," Bouaziz said.
Ontex's revenues have risen 7.2 percent on average per year
in the decade until 2013 and it is the largest maker of
retailer-branded diapers and feminine care products in Western
Europe, nearly three times bigger in this category than its
closest competitor, Swedish company Svenska Cellulosa (SCA)
"Growth for baby diapers and feminine care is low in the
western world, but that's not the case for adult incontinence,"
said Nordea analyst Stellan Hellstrom, who follows SCA. "The
branded products offer higher margins, although there's been
more growth in private labels."
Ontex's listing will give it an enterprise value of between
1.74 and 1.94 billion euros. Private equity firm TPG
and Goldman Sachs acquired Ontex in 2010 for a reported
enterprise value of 1.2 billion euros.
The flotation, at 16.50-20.50 per share, will raise 583-620
million euros from selling 19.7 million new shares and 7 million
existing shares by the former management and Whitehaven B, an
investment vehicle controlled by TPG and Goldman.
Whitehaven B would continue to hold at least 45.8 percent of
Ontex even if high demand triggered an over-allotment option.
Ontex said it expected to raise a net 278 million euros,
which would be used to cut its debt, which totalled 862 million
euros on March 31.
The company had adjusted core earnings (EBITDA) of 173.6
million euros last year. An enterprise value of 1.94 billion
euros would give the firm a valuation of 11.2 times earnings.
For Kimberly-Clark, which makes the Huggies brand of
diapers, that ratio is 10.6 times, while for Svenska Cellulosa,
which also has pulp and paper businesses, it is 9.4 times.
The IPO, with listing due by June 25, is being led by Bank
of America Merrill Lynch, Goldman Sachs and UBS
, with JP Morgan as a joint international
bookrunner. TPG Capital, is international co-manager and
Belgium's KBC Securities and Petercam are joint lead managers.
($1 = 0.7345 Euros)
(Additional reporting by Steve Slater and Freya Berry in
London; Editing by Erica Billingham)