CJ Olive Young, the beauty chain unit of South Korean food and entertainment conglomerate CJ Group, is set to raise funds ahead of a planned initial public offering (IPO) although speculations continue about the possibility of a sale.

Koo Chang-geun, chief executive of CJ Olive Young, said in an internal message to its employees on September 2 that the company planned to list its shares on the South Korean stock exchange by 2022 and also raise money from an outside investor before the IPO, according to industry sources.

Koo added in the message that CJ Corp, the holding company of CJ Group, will continue to have a controlling ownership stake in the beauty chain, denying rumors about a buyout.

Credit Suisse and Shinhan Investment are said to be working with CJ Olive Young to sell a 20% to 30% stake in the company. Hiring joint deal managers – which is unusual for a minority stake sale – is part of a move to prepare for an IPO, said industry watchers, who expect that Shinhan Investment will likely act as bookrunner on the beauty chain’s planned listing.

CJ Olive Young is denying rumors about selling the company but industry watchers think that is still a possibility, citing the A Twosome Place deal in 2019.

In February 2018, CJ Foodville, the restaurant business arm of CJ Group, raised 200 billion won ($168 million) by selling 40% of its split-off coffee chain A Twosome Place to Anchor Equity Partners in a pre-IPO funding.

However, A Twosome Place called off its IPO due to unfavorable market conditions. CJ Foodville eventually offloaded an additional 45% stake in the coffee chain to Anchor Equity Partners in June 2019 before selling the remaining stake this July.

“CJ Olive Young’s pre-IPO funding reminds me of what happened to A Twosome Place,” an industry source said. “CJ Foodville publicly denied rumors about a sale but ended up being sold. This could also be the case for CJ Olive Young.”

The beauty chain’s fate depends on the IPO valuation, industry watchers said, because the company could cancel its IPO if the valuation does not meet its expectation.

Last year the value of CJ Olive Young was roughly estimated at 1 trillion won, which was calculated by multiplying its 2018 earnings before interest, tax, depreciation and amortization of 98.4 billion won by an average multiple of 9.3 times for its listed peers. But now the value could be less than that with the company’s financial performance affected by weak demand due to the Covid-19 pandemic.

“An investor in talks with CJ Olive Young is also likely to consider the possibility of buying a controlling interest in the future and would prefer to include a call option in the agreement as Anchor Equity Partners did (in the A Twosome Place deal),” an official at one private equity firm said. (Reporting by Ik-hwan Choi)