Monday 11 July 2016 08:41 AM
Caci Clinic owners appoint Banga on board to lay groundwork for IPO
By Fiona Rotherham
July 11 (BusinessDesk) - Fab Group, a skincare and appearance medicine company that includes the Caci Clinic franchise, has appointed former NZ Venture Investment Fund chief executive Franceska Banga to chair its new board ahead of a potential public listing by 2019.
The Auckland-based company was founded in 1994 by husband and wife, Jackie and David Smith, and is aiming to have another go at a public listing after a dismal attempt under the Caci Group banner on the NZX's alternative market nearly a decade ago.
As a step towards a potential listing on either the NZX or ASX by 2019, the company is establishing a formal board which is currently exclusively female with Banga as independent chair alongside co-founder Jackie Smith and chief executive Glenice Riley. Another two independent directors, including one with public listing experience, are to be appointed.
The company is 100 percent owned by a trust associated with the Smiths and owns and operates a number of brands and other products beyond being franchisor for the 36 Caci clinics, which offer treatments such as laser hair removal and botox. It provides the training for the beauty and skin clinicians, the medical equipment used in the clinics, and also sells a range of skincare products and cosmetics such as Smashbox and Murad.
Fab's group revenue of $38 million include franchisees and the company has had steady profit growth in the past five years as it takes advantage of scale.
The outlook hasn’t always been that rosy as the Smiths’ last public listing attempt demonstrated. In late 2000 Caci Group issued 1.2 million shares to the public at the price of 50 cents per share and listed on the New Capital Market (predecessor to the NZAX) which purchased the then 15 franchised Caci clinic operations. Following a varied operating performance and sluggish share price, the company’s 200 or so shareholders accepted a 38 cents-per-share takeover offer by the Smiths in 2007 after the shares last traded at half their issue price.
In an independent report on the takeover, Grant Samuel said the offer was fair and included a premium for control given it was operating in a niche industry that was likely to have only a limited pool of potential acquirers and competition within the beauty therapy industry had intensified.
Banga said that listing was in the “very early days” when it wasn’t the right time for the company and it was now in a much better position to be able to get to the next stage.
“That’s why they’re bringing on a board to have the right governance and right systems and processes to ensure it is successful,” Banga said.
A public listing is just one of several options for capital raising over the next few years as the company wants to grow to 50 clinics in New Zealand and expand offshore under another brand, she said.
It has the New Zealand rights to the brand Caci which is a market leader in this country. Caci started with the Computer Aided Cosmetology Instrument machine developed by Californian doctor Thomas Wing for the treatment of soft tissue injuries such as whiplash and sprains and pain relief. The machine gained popularity in medical clinics in the UK and the US before the Smiths introduced the brand to New Zealand with a clinic in Newmarket.
Work will be done in the new few months on identifying the best overseas opportunities though Australia is a likely candidate, Banga said. The idea is to get some runs on the board with offshore growth before taking the company public or seeking private equity funding.
The company’s back-end systems and processes stand it in good stead for expansion although the international market is highly competitive, Banga said.
“You have bedroom beauty therapists at one end and cosmetic surgery at the other end. We sit in the middle piece for appearance and skincare and it’s a very crowded but very fragmented market. There’s an opportunity in that space for a company that knows how to do it well.”
Banga left NZVIF earlier this year and has a broad range of directorships including for Auckland Tourism, Events, and Economic Development, Frog Parking, Continuity Capital, and Constellation Capital.