Does Nice One's IPO set a benchmark for beauty and e-commerce deals in the GCC?

Zawya

30-01-2025

January has been drawing to a close amidst a flurry of IPO activity across sectors in Saudi Arabia, but it is the debut of Nice One that has set a benchmark for companies in the beauty and ecommerce space that are looking to scale up.
Nice One's IPO had a strong debut this month at $320 million, with the company's share price closing at a 30% high on the first day of trade, the maximum allowed by Tadawul.
Shares in the Saudi unicorn were priced at SAR 35 per unit, with the first three weeks of trade witnessing a peak of SAR 64.50 and Tuesday's closing share price settling in at SAR 56.00.
Analysts predict this positive momentum could signal more deal-making activity from companies in this sector looking to leverage favourable economic conditions while capitalising on a growing investor appetite for the beauty, retail and e-commerce sector.
'Saudi Arabia's beauty market is on a rapid growth trajectory, driven by factors such as a young population, high spending on luxury products, and increasing e-commerce penetration: 70% of the population shops online,' Vijay Valecha, Chief Investment Officer, Century Financial, told Zawya.
The Saudi-based SNB Capital Research, which initiated coverage on Nice One with a Neutral rating and a price target of SAR 53.2, said the beauty and care e-commerce platform provides a 'unique angle to the evolving Saudi retail sector given its tech tilt.'
'We believe the strong growth in the sector and online segment is due to higher spending from middle class, more online options with growing confidence in online shopping and enhancements in the digital infrastructure,' SNB added, saying Saudi's BPC market has one of the highest levels of beauty spend/capita of SAR1,568 in 2023, significantly higher than other key economies.
Nadine Nassar, Counsel at the law firm Baker McKenzie, Saudi Arabia, which advised the online beauty retailer on its IPO, said its success was a strong indicator that the beauty, lifestyle and e-commerce sectors in Saudi Arabia and the wider GCC are ripe for further investment and capital markets activity.
'Customers in the region are particularly renowned for their affinity for luxury and high-quality beauty products. Further, being tech-savvy, they favour online shopping, making the e-commerce model and the overall retail landscape highly attractive to businesses and investors,' she said.
Digital boom
The appeal of the digital marketplace has seen e-commerce platforms like Noon.com grow exponentially over the years, delivering everything from beauty and fashion to groceries across markets such as the UAE, Saudi Arabia and Egypt.
Mohamed Alabbar, Chairman of Emaar Properties, raised $1 billion from backers in 2016, including the Saudi Public Investment Fund (PIF), to create the platform. With the company riding the e-commerce wave in wake of the COVID-19 lockdown, Alabbar revealed in 2021 that Noon.com, which is Amazon's rival in the region, was set to draw as much as $2 billion in financing from investors including the Saudi sovereign wealth fund over three to four years.
An IPO wouldn't be off the table either, for the Noon.com frontman has spoken publicly about his openness to floating the company's shares in the future. In August 2023, he told UAE state news agency that 'the Arab world is in need of a publicly listed e-commerce entity.'
Companies such as the Dubai-based Huda Beauty, created by blogger Huda Kattan and her sisters Mona and Alya in 2013, has also reached a scale that makes them viable for trading.
'Huda Beauty is reportedly exploring the sale of its fast-growing perfume business, signalling increased momentum in the region's beauty industry,' said Valecha, referring to a Bloomberg report from September stating that the company was considering selling all or part of its fast-growing perfume division.
According to Nassar, even as her firm is 'actively working on several IPOs across a diverse range of sectors' in Saudi Arabia, she mentioned that there has been a growing interest in sectors that have performed well in recent months.
'The strong start [to 2025] is a promising indicator for the capital markets in Saudi Arabia. This signals continued investor confidence and a positive outlook for the year ahead. We believe that IPOs could emerge as the most effective strategy for companies across various sectors to finance their growth initiatives,' she said.