(Bloomberg) — The Honest Co., the personal-care products brand co-founded by actress Jessica Alba, jumped more than 49% in its U.S. listing debut.
The company’s shares opened at $21.22, after pricing at $16 each. Honest and its existing stockholders, including private equity firm L Catterton and General Catalyst, raised $413 million in the share sale. At $23.88 — the highest price it hit in early trading — Honest has a market value of almost $2.2 billion.
An actress turned entrepreneur, Alba included a letter to potential investors in the company’s filings touting Honest Co.’s commitment to healthy products. In addition to baby products like shampoos, the company also sells cosmetics as well as cleaning supplies, a collection that was launched during the coronavirus pandemic.
Alba, who has starred in movies such as “Fantastic Four,” traced her interest in healthy products to her own childhood ailments.
“I suffered from chronic illnesses, severe asthma and allergies, leading to long, lonely weeks in the hospital,” she said. “There were no lasting solutions for my health issues and by the time I was 10, I became aware of how wellness can define your whole life. That’s never left me.”
Alba, now the company’s chief creative officer, owns 5.65 million shares including options. She didn’t plan to sell her shares in the offering, according to the filings with the U.S. Securities and Exchange Commission. At the IPO price, her stake was worth about $90 million.
Fully diluted to include employee stock options and restricted stock units, the company is valued at almost $2.5 billion.
L Catterton, Lightspeed
Honest offered 6.5 million shares in the IPO with the rest sold by existing investors. Those selling some of their shares included private equity firm L Catterton, Institutional Venture Partners, Lightspeed Venture Partners and General Catalyst, the filings show.
Founded in 2011, Honest has grown into a national brand and has partnerships with retail giants including Target Corp. and Amazon.com Inc.
Alba has said she became particularly concerned about ingredients in baby products and that she tried to appeal to lawmakers for chemical legislation reform.
Honest’s business touches on several trends that have become more prominent during the coronavirus pandemic, including a focus on wellness and elevated demand for cleaning products. Those have buoyed top-line results for household-goods companies such as Procter & Gamble Co., the maker of Pampers diapers and Tide laundry detergent.
Sales Gain
Los Angeles-based Honest generated sales last year of about $301 million, a 28% increase over 2019. It lost $14.5 million in 2020. Diapers and wipes accounted for 63% of last year’s sales.
Already, though, the pandemic boom for consumer-products makers is starting to fade. P&G has acknowledged that rising costs are pressuring results, toilet paper maker Kimberly-Clark Corp. recently cut its earnings forecast and Clorox Co. last week missed Wall Street’s estimates for quarterly sales. In addition to shifting demand, manufacturers are grappling with higher commodity and freight costs.
Honest said in the filing that it’s working to manage disruptions to its supply chain, but it anticipates “sustained market turmoil” as a result of the pandemic and its economic impact. “If the disruptions caused by the Covid-19 pandemic continue for an extended period of time, our ability to meet the demands of our consumers may be materially impacted.”
The offering is being led by Morgan Stanley, JPMorgan Chase & Co. and Jefferies Financial Group Inc. The shares are trading on the Nasdaq Global Select Market under the symbol HNST.
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