GHD Owner Plots Hair-Raising £400m Auction

The owners of GHD, a supplier of hair products to celebrities such as Victoria Beckham and the singer Katy Perry, is plotting a sale that will value it at more than £400m.

Sky News has learnt that Lion Capital, the private equity firm, has appointed bankers at Rothschild to oversee an auction of GHD, whose name stands for Good Hair Day.

Documents have been sent to prospective buyers outlining the rapid growth of the company, which made £33.7m in pre-tax profit in its 2015-16 financial year.

Sources suggested that the company was likely to be valued at roughly 13 times its earnings, meaning that a price-tag of about £400m is being targeted by Lion (Other OTC: LIOPF - news) .

Sales grew by 9.5% last year to £181.2m.

GHD manufactures a wide range of straighteners, curling products and hairdryers, and is understood to be pitching a strong innovation pipeline, developed with the aid of new technologies, to prospective buyers.

It (Other OTC: ITGL - news) was founded in 2001 with a £15,000 investment from three entrepreneurs in Bradford, West Yorkshire, who bought the rights to a Korean-developed hair-straightening iron.

The company now has an alliance with Beckham's fashion business, and leans heavily on a range of celebrity endorsements to promote itself.

GHD's slate of new products includes 'Project Nala', the relaunch of a styling product called Gold; and a new "disruptive curling product" labelled 'Project Goldilocks', which the company regards as "a dramatic breakthrough because [the] category has high consumer dissatisfaction", according to an insider who has seen the initial sale documents.

Lion, which specialises in improving the performance of consumer products businesses and is the current owner of brands such as All Saints, the fashion retailer, has owned GHD since 2013.

In the UK, GHD products are sold in upmarket outlets such as Harvey Nichols and Selfridges, with the company keen to expand its international reach by growing sales in countries such as Brazil, China, India and South Korea.

"The bankers are telling bidders that they can turn GHD into a billion dollar brand," said one insider.

The sale documents also claim that GHD has a higher net promoter score - the advocacy of its customers - than brands including Apple (NasdaqGS: AAPL - news) , they added.

Other private equity groups are likely to examine bids for GHD, which Lion acquired from Montagu Private Equity (LSE: 0QLS.L - news) , another buyout firm, for £300m, with major consumer products-makers also expected to examine possible offers.

GHD has been run since 2014 by Anthony Davey, a former Procter & Gamble executive.

The company's rival, Tangle Teezer, is also exploring a sale and is in talks with a number of private equity firms, which analysts say reflects a growing demand for grooming products.

Lion Capital could not be reached for comment on Monday.