Coty slipped on its stock market debut on Thursday, after raising $1bn from what was the largest consumer products initial public offering on the US market for more than a decade.

Shares fell by as much as 3.5 per cent in early trading on the New York Stock Exchange before slightly rebounding, after the fragrance and beauty group sold 57.1m shares at an offering price of $17.50.

Coty, which makes perfumes for luxury labels such as Marc Jacobs and Calvin Klein and owns nail polish brands including OPI and Sally Hansen, finished 0.8 per cent lower giving it a market value of $6.6bn.

The first-day jitters reflected investors’ concerns over whether Coty was priced at a multiple that was only slightly cheaper to its publicly traded competitors. Investors also pointed to Coty’s flat revenue growth in its most recent year as potential source of weakness.

“Everyone is looking to Coty and pondering its growth potential,” says Gilbert Harrison, chairman of Financo, a New York-based investment banking firm.

He added: “Recent luxury IPOs may have gone extremely well but that doesn’t necessitate a warm reception from the markets. Investors will be looking for clear signs that the company is able to continue sustainable growth in all aspects of its business.”

The New York-based company will not receive any proceeds from the 19 per cent float. Joh A Benckiser, Coty’s controlling shareholder and the holding company for Germany’s billionaire Reimann family, is drawing down its stake in the company while retaining voting control.

Minority shareholders Berkshire Partners, the Boston-based private equity group, and Rhône Group, the private equity firm, have also used the IPO to reduce their holdings.

Coty’s owners have been seeking to capitalise on booming global demand for cosmetics and fragrances, particularly from growing middle classes in developing markets.

Research from Goldman Sachs estimates that the prestige cosmetics market is worth $46.4bn, which constitutes around 15 per cent of all luxury sales.

Beauty purchases by middle-class customers – particularly those in emerging economies who are becoming increasingly sophisticated and concerned with personal care – are considered a gateway to higher spending and the largest future influencer on luxury shopping.

“The industry is seeing a seismic shift not unlike the one witnessed within the apparel sector several years ago,” says Robert Burke, a New York-based luxury retail consultant.

“The aspirational consumer is increasingly looking for a seamless lifestyle experience from a beauty brand; any company able to harness that is likely to see considerable return on its investments.”

The company’s public offering is the largest in the personal consumer products industry since the Carolina Group raised $1.1bn from an IPO in January 2002, according to Dealogic.