Affirma to buy Korean cosmetics manufacturer
Affirma Capital, a GP established through the spin-out of Standard Chartered’s private equity business, has agreed to acquire a controlling stake in South Korea-based Hwa Sung Cosmetics.
The target company produces color cosmetics for the likes of Amore Pacific, Anastasia, Estee Lauder Group and Shiseido. It is considered one of the top-four eyebrow product manufacturers globally alongside Germany’s Schwan-Stabilo and Faber-Castell and Japan’s Tokiwa. The product portfolio also includes lipsticks and facial foundations.
Hwa Sung was founded in 1964 and soon established itself as the largest cosmetic wooden pencil manufacturer in Korea. Having expanded its domestic product offering, the company began developing its overseas marketing capabilities in 2001. It serves private label manufacturers, distributors and brands in the US, Australia, Germany, Italy, Russia, Saudi Arabia, Taiwan, China and India. A second factory was launched three years ago to meet rising demand.
The global appeal of Korean culture is a familiar theme in private equity, with investors targeting K-pop, K-beauty, K-fashion, and even K-food. In the beauty segment, Bain Capital and Goldman Sachs secured a bumper exit from cosmetics supplier Carver Korea in late 2017, having pursued an aggressive China expansion strategy. Other manufacturers that have received PE backing include Able C&C, Press & Converting, E.CIS Cosmetic, and Clio Cosmetics.
Earlier this year, an investment arm of Johnson & Johnson led a funding round for Memebox, an online beauty products retailer that positions itself as a global platform for K-beauty brands.
Affirma was launched by the management of Standard Chartered Private Equity (SCPE), which won support from Intermediate Capital Group to acquire the remaining $1 billion in assets off the bank’s balance sheet. An additional $400 million was provided for new deals and follow-on investments. The team manages $3.6 billion in total, including previous secondary sales of SCPE assets.
BDA Partners was the exclusive financial advisor to the founder of Hwa Sung on the deal. The size of the transaction was not disclosed.
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