Imbalie Beauty recently released its last integrated annual report under that name. There has been yet another name change for this listed company, along with a significant change of strategy under new owners. Ghost Grad Kreeti Panday books a nail appointment and unpacks this story for us.
Back in 2007, Placecol Holdings acquired the Dream Nails group and the entity was listed on the AltX, which is where companies list on the JSE in the hope of eventually growing into large groups with a vibrant shareholder register. Sadly, liquidity is virtually non-existent on the AltX and most companies never move from the AltX to the Main Board.
A 2007 listing marked the top of that bull market cycle, a golden period in South Africa when the Ghost was starting university and I wasn’t even in primary school. The top of a cycle is when you see the more unusual, risky listings come to market, as there is strong appetite from investors to take a chance and win a prize (or not, as is often the case).
Having survived the Global Financial Crisis, the name change to Imbalie Beauty only took place in 2012 after the group acquired the Perfect 10 group of beauty salon franchises. Our country had embarked on a “lost decade” by then and Imbalie doesn’t have a pretty story to tell, despite operating several skincare brands in addition to the beauty salons and skin care clinics.
There were problems long before Covid
Imbalie was reporting headline losses long before Covid came to our shores and replaced beauty masks with cloth masks. After a painful rights offer in 2018 to recapitalise the business, the JSE censured the business in 2019 for publishing information related to the underwriting of the rights offer that was misleading to shareholders.
In 2020, Imbalie Beauty suffered great losses due to the Covid-19 lockdown as beauty salons were forced to close for 87 days. The financial losses arguably paled in comparison to the tragedy of women being forced to endure their unibrows and cracking nails for 3 months.
The group’s loss worsened from R2.16 million in 2020 to R9.37 million for the year ended February 2021, a deterioration of around 332%!
Manicures, pedicures and (attempted) financial cures
If things were tough before the pandemic, you can imagine how quickly things fell over during the lockdowns. The group fought for survival, but it was just too hard.
The i-BLOOM name was launched to the market during lockdowns, with an increased push into training and education with the i-BLOOM Beauty & Wellness Academy. This is an international training platform directed at cultivating specialists in the beauty and wellness industry. To complement this, Imbalie created a Customer Solutions Division in August 2020, with the aim of building salon-quality products that customers could use within their own homes as well as the training of therapists to provide home-based solutions.
CEO Esna Colyn described this initiative as a way to give new opportunities to women who were looking for an additional source of income, especially due to the numerous retrenchments taking place during the pandemic and the intensified duties that women were forced to take on in the home, including taking on responsibility for the schooling of their children.
In my case, my mother wasn’t trying to help me with my calculus, yet she still couldn’t wait to get rid of me so she could use the WiFi again.
The goal of the division was to develop a community of 1,000 women over the subsequent three years, providing a “beautiful experience” for clients. Sadly, the experience was not beautiful for shareholders, as the pandemic was the (ugly) nail in the coffin for the business.
Along came a banker
In October 2020, it was announced that the group had procured a R6 million loan from ABSA to help ride out the Covid-19 losses. When a company burns through equity and needs to replace that capital with debt, there is often a permanent loss to shareholders.
This loan came with the condition that the subsidiary that receives the loan must operate in the private market in order to save costs. In other words, the JSE would be bidding farewell to this business. With Long4Life also gone (the owner of Sorbet), there’s nowhere to get your nails done on the local market.
The beauty business is no doubt enjoying a resurgence in trade at the moment, in line with what we are seeing in other service businesses. Listed shareholders won’t get to enjoy that, as the subsidiaries of Imbalie have now been sold to the privately-held i-BLOOM Group. This deal was effective on 31 January 2022.
Vuka, Buka
Vuka is the Zulu word for “wake up” and that’s hopefully what this listed shell will be doing. After the acquisition of a 61.26% stake in the listed company by new investor B&B Media (also with an effective date 31 January 2022), Imbalie Beauty changed its name (again!) to Buka Investments.
Little is known about B&B Media, a company primarily engaged in advertising in addition to holding “various fashion and retail assets” based on media reports. Some of those assets will be reversed into Imbalie Beauty as a “listed shell” which is a cheaper way to achieve a listing for your assets.
It didn’t cost B&B terribly much to take control of the listed vehicle. The price was 0.09 cents per share, so the total investment was R7.6 million. This triggered a mandatory offer to other shareholders, which was only accepted by holders of 1.5% of shares in issue. This took the stake to 62.76%.
Those who rode Imbalie all the way to the bottom are clearly hoping that the new strategy will pay off. Once you’ve lost practically everything, just holding onto the shares gives decent “option value” as there’s only upside from there. Either that, or shareholders were too busy getting their nails done to notice the offer.
We won’t know for sure whether operating in the private environment helps i-BLOOM achieve financial sustainability. The most we can do is judge this based on the growth (or lack thereof) of the underlying franchises.
