The shares of The Honest Company rose nearly 44% in their first public trading on Wednesday. Honest’s shares closed at $23, putting a value on the company of $2.68 billion. The initial public offering price was $16.

WHO: Co-founded by actress Jessica Alba, The Honest Co. was launched in 2012 as a direct-to-consumer proposition of safer alternative baby products. It has evolved into an eco-friendly consumer-goods business making baby, beauty, and household products, and marketing itself as a clean and “better for you” brand.

IN THEIR OWN WORDS: “We plan to grow Honest.com by leveraging our deep connection with existing consumers and drawing new consumers through increased brand awareness and investing in performance marketing,” the filing stated. “Our flagship digital platform is core to our consumer engagement strategy, providing an immersive brand experience through our original content as well as a convenient shopping channel. Additionally, we intend to leverage our successful relationships with our third-party ecommerce partners with an aim to capture the growing portion of CPG sales transacted online in the United States.”

Honest CEO Nick Vlahos told Yahoo Finance Live that the successful IPO was a “validation” of the company’s strategy. “We’re a mission driven brand. We are at the forefront of this kind of clean movement as it pertains to how consumers are looking at products from an ingredient perspective, around sustainability, around social responsibility.”

“To our present and future shareholders, here’s what we promise to you: we’ll passionately prioritize the health and wellbeing of people and the planet, we’ll fearlessly challenge the status quo and innovate to deliver on our mission, and we’ll continually push to be the best version of our ourselves. We’re here to create a honest world and we’re just getting started,” said Jessica Alba.

WHY: The capital from the IPO will be used for expanding its product lines and geographic reach.

DETAILS:

• As of May 5, Honest’s shares are listed on the Nasdaq stock market under the symbol HNST. The company sold 25.8 million in shares at $16 each, raising $412.8 million, valuing the company at $1.44 billion.
• The Los Angeles-based company is now valued at almost $2.1 billion, or $2.45 billion when fully diluted to include employee stock options and restricted stock units.
• The company is offering around 6.45 million shares in the IPO with the rest being sold by investors, including L Catterton, IVP, Lightspeed, and General Catalyst, according to filings.
• Prior to the IPO, L Catterton’s THC Shared Abacus was the lead shareholder with a 37.5% percent stake; other large stakeholders are Institutional Venture Partners at 13.9%, Lightspeed Venture Partners 12.3%, Fidelity 9.3%, and General Catalyst 5.1%, and Chief Executive Officer Nick Vlahos has a 4.1% stake.
• The IPO marks an almost 260% return for L Catterton, who invested $200 million in 2018. The company sold about half its stake in the offering.
• Jessica Alba still owns 6.7% of the company and she also has exercisable options valued at about $24 million.
• In 2020, Honest reported $14.5 million in losses and $300.5 million in revenue. In 2019, it had $31.1 million in losses and $235.6 million in revenue.
• 55% of Honest’s sales are digital orders, 45% come from brick-and-mortar, and international represented 2% of Honest’s 2020 revenue. In the IPO paperwork, the company said it expected those losses to continue into this year.
• The company runs three business segments: Diapers and Wipes, its largest segment (63%), Skin and Personal Care (26%), and Household and Wellness (11%).
• According to the company, Honest’s share of the natural products market in the US is less than 5%.
• Morgan Stanley, Jefferies, and J.P. Morgan are among the lead underwriters for the offering.

HISTORY:

• To date, Honest Co. has raised $497 million in funding, according to Pitchbook.
• As early as 2014, talks of Honest Co. planning an IPO started as Brian Lee, Honest’s former CEO and a co-founder, reportedly discussed taking the company public. In 2016, rumors of a planned IPO surfaced.
• A funding round in 2015 valued Honest Co. at about $1.7 billion, a person with knowledge of the details at the time told Bloomberg.
• In 2016, Unilever was eyeing an acquisition of the company but ultimately bought its competitor Seventh Generation for $700 million.
• In 2016, Honest Co. was working with Goldman Sachs Group Inc. and Morgan Stanley on plans for an initial public offering, people familiar with the matter at the time told Fortune.
• The brand’s approach to labeling its products has led to trouble in the past. In 2017, the company settled a lawsuit that claimed it fraudulently labeled some of its products as “natural,” “plant-based,” or “no harsh chemicals (ever!).” Honest settled the suit over cleaning ingredients for $1.5 million, and a suit related to “natural” labeling for $7 million.
• Nick Vlahos, the current CEO, joined the company in March 2017. Vlahos previously served as the COO at The Clorox Company and as VP and General Manager of Burt’s Bees.
• In 2018 L Catterton made a $200 million minority investment in The Honest Co. The size of the stake wasn’t disclosed. Honest raised $297 million from its six prior funding rounds, according to data from Dow Jones VentureSource.