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How to invest in the Adore Beauty IPO

The Adore Beauty IPO is expected to be one of the biggest of the year. Here's how to invest.

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Buckle up investors, Adore Beauty is set to list on the Australian Securities Exchange (ASX) in what will be one of the country's biggest IPOs of 2020.

Adore Beauty is an Australian ecommerce website that offers global and domestic beauty and personal care products, some of which are exclusive to Adore. To date, it has a customer base of more than 590,000 and features 11,000 products.

The company is looking to raise $270 million with an offer price of $6.75 per share. It's expected to go public on 23 October under the ticker code ABY.

How to buy shares in Adore Beauty

To invest in an IPO, you'll need to be registered with a participating broker. This can be tricky for retail investors because there are usually only a few firms allocated for each IPO and they are typically full-service stockbrokers.

In this case, the lead managers are Morgan Stanley, UBS, and Shaw and Partners, however it always pays to check with your broker whether it's possible to access IPO stock, regardless of whether they're the lead manager.

Your other option is to buy shares in Adore Beauty once it goes public. To do that, you'll need to be signed up to a share trading platform:

  1. Compare share trading platforms. To buy shares in an Australian company, you'll need to sign up to a platform with ASX market access. If you're a beginner, look for a platform with low commissions and investment tools to track your portfolio. Narrow down top brands with our comparison table below.
  2. Open and fund your brokerage account. Complete an application with your personal and financial details, like your ID and bank information. Fund your account with a bank transfer, credit card or debit card.
  3. Search for Adore Beauty. Find the stock by name or ticker symbol: ABY. Research its history to confirm it's a solid investment against your financial goals.
  4. Purchase now or later. Buy today with a market order or use a limit order to delay your purchase until Adore Beauty stock reaches your desired price. To spread out your purchase, look into dollar-cost averaging, which smooths out buying at consistent intervals and amounts.
  5. Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimise risk through the market's ups and downs. You may be able to buy a fractional share of Adore Beauty, depending on your broker.
  6. Check in on your investment. Congratulations, you own a part of Adore Beauty. Optimise your portfolio by tracking how your stock, and even the business, performs with an eye on the long term. You may be eligible for dividends and shareholder voting rights on directors and management that can affect your stock.

What we know about the Adore Beauty IPO

Adore Beauty's IPO is being underwritten by lead managers Morgan Stanley, UBS, and Shaw and Partners and it's set to list on the ASX on 23 October under ABY. The offer is expected to raise $269.5 million at a share price of $6.75.

At this stage, Adore Beauty doesn't expect to pay a dividend in the near future, making this a growth play.

Adore Beauty IPO key numbers
Offer price$6.75
Dividend yield0%
Total number of shares available under the offer33.9 (millions)
Proposed ASX codeASX: ABY
Target market cap$635.3 million
Retail offer opens14 October
Retail offer closes21 October
Settlement26 October
Expected listing on ASX23 October
Expected despatch of holding statements29 October

Source: Adore Beauty prospectus

Adore Beauty says it will use the capital raised in the IPO to fund its growth strategy, including the launch of a new app.

Company history

Adore Beauty was launched in 2000 by Kate Morris and James Height and is headquartered in Melbourne, Australia. Its website hosts 11,000 products from over 230 global brands.

In 2006 the company partnered with its first global brand, Clarins. In 2016, it launched Beauty IQ, an integrated content, news, reviews, marketing and ecommerce platform. In 2019, Adore Beauty launched its dedicated New Zealand website.

Although it opened a store with Chinese marketplace Alibaba in 2016 as a way to enter the Chinese market, it shut its doors on the platform six months later citing strategic changes.

Adore Beauty balance sheet

Adore Beauty's main source of revenue is through the sale of beauty and personal care products online.

The good news is that the company is clearly growing and its bottom line has particularly benefited from the rise in demand for online shopping during COVID-19.

In FY20, the Company generated $121.1 million of revenue, up from $52 million in FY18 and the company has also been profitable over the last 12 months. Estimated net profit (NPAT) in FY20 was $2.5 million, up from just $500,000 the year before.

Adore Beauty is a well established brand in the Australian market with a fairly fast growing customer base. Over the last four years, it has seen active customer numbers grow 278% to 590,000.

Compare ASX share trading platforms

To buy stock in Adore Beauty once it lists, you'll need to open a brokerage account with access to ASX stocks. Compare your options using the table below to find the best fit.

Data indicated here is updated regularly
Name Product Standard brokerage fee Inactivity fee Markets International
IG Share Trading
Finder Award
IG Share Trading
AUD 8
AUD 50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares, Forex, CFDs, Margin trading
Yes
Brokerage discount: $5 on Australian shares for active traders & $0 commission on US and global shares
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, forex and CFDs, plus get access to 24-hour customer support.
eToro Share Trading (US stocks)
USD 0
USD 10 per month if there’s been no login for 12 months
Forex, CFDs, US shares
Yes
Zero brokerage share trading on US stocks with trades as low as $50.
Note: This broker offers CFDs which are volatile investment products and most clients lose money trading CFDs with this provider.
Join the world’s biggest social trading network when you trade stocks, commodities and forex from the one account.
Superhero share trading
AUD 5
No
ASX shares
No
Pay zero brokerage on all Australian ETFs.
Trade ASX stocks with a flat $5 commission fee and a low minimum investment of just $100.
CMC Markets Stockbroking
AUD 11
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, mFunds
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, managed funds, forex, commodities and cryptocurrencies, plus access up to 15 major global and Australian stock exchanges.
ANZ Share Investing
AUD 19.95
No
ASX shares, Global shares, Margin trading, Options trading
Yes
Earn 1 Qantas Point per AU$3 spent on brokerage fees on certain instruments.
Access Morningstar reports, company announcements and and live pricing via ANZ’s share investing platform. Available for desktop and mobile.
Westpac Online Investing Account
AUD 19.95
AUD 63.50 per year on the global markets account
ASX shares, Global shares, Options trading, US shares
Yes
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Compare up to 4 providers

Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares.

Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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