Jessica Alba makes millions through stock market float of beauty business

The Honest Company, which makes 'clean' beauty and baby products, is valued at about $1.89bn following its initial share price rise

Jessica Alba, co-founder and chief creative officer of Honest Company, left, and chief executive Nick Vlahos ring the opening bell at the Nasdaq exchange in New York on Wednesday to celebrate the company's initial public offering. BloombergShow less

Actress Jessica Alba cemented her claim to one of the most lucrative side gigs in Hollywood after shares of her beauty business, the Honest Company, looked to open at around $20.80, or 30 per cent above its IPO price.

The “clean” beauty and baby products maker had earlier priced its shares at $16, within its marketed range of $14 to $17. The indicated opening price values Ms Alba’s roughly 5 per cent stake at $88 million. She also has exercisable options valued at about $21m.

“I was born into a hardworking Mexican-American family. My parents worked multiple jobs, doing whatever it took to get by,” Ms Alba wrote in a letter included in the company’s prospectus, describing a childhood marked by poor health and hospital stays.

“By the time I was ten, I became aware of how wellness can define your whole life. That’s never left me.”

Ms Alba, 40, founded the business in 2011, motivated by the dearth of baby products that were free of harsh chemicals. The carbon-neutral company makes nappies, wipes, shampoo and lotions it bills as “clean and natural”, and targets a customer base of parents who are eco-conscious, aspirational and relatively affluent. Honest Company had revenue of about $301m in 2020, a 28 per cent jump from a year earlier, and an operating loss of $13.5m.

The Los Angeles-based company is now valued at $1.89 billion, or $2.21bn when fully diluted to include employee stock options and restricted stock units. That’s significantly more than its $860m implied valuation in a 2017 funding round, according to Pitchbook. Honest has been dogged in the past by product recalls and controversy over its claims to use only natural ingredients. Prior to those issues, it was valued at $1.7bn in a 2015 funding round.

The IPO marks a 220 per cent return for L Catterton, the private equity firm backed by billionaire Bernard Arnault that invested $200m in 2018. The company sold about half of its stake in the offering.

The actress is a rare example of someone successfully bridging a career between Hollywood and Wall Street. While many celebrities strike licensing deals for fashion lines or products such as perfume, few have gone on to found publicly-traded companies.

Ms Alba, whose official title is chief creative officer, continues to work as an actor, most recently starring in the crime television series  LA's Finest.