Macquarie Asset Management has been selected as the preferred bidder to acquire the color cosmetics original design manufacturer (ODM) Hwasung Cosmetics.
On the 12th, according to the investment banking (IB) industry, Affirma Capital, the largest shareholder of Hwasung Cosmetics, and the sell-side advisors Samsung Securities and Rothschild recently selected Macquarie as the preferred bidder to acquire Hwasung Cosmetics. The two sides plan to move to sign a stock purchase agreement (SPA) after coordinating detailed transaction terms.
The assets for sale are a 70% equity stake in Hwasung Cosmetics held by Affirma Capital through the special purpose company (SPC) Asterion Holdings and a 100% stake in NOWCOS, an ODM for basic skincare products. Affirma Capital has pursued a package sale bundling Hwasung Cosmetics, which is strong in color products, with NOWCOS, a basic skincare company.
The Hwasung Cosmetics sale showed signs of strong interest from the outset. In the preliminary bidding, five to six domestic and foreign financial investors (FI) and strategic investors (SI) submitted letters of intent (LOI). The shortlist included Macquarie as well as Korea Investment Private Equity (Hantu PE). Hantu PE formed a consortium with EcoPro to consider acquiring Hwasung Cosmetics but came up short.
Although the specific price has not been disclosed, the market has floated the possibility that Hwasung Cosmetics could fetch more than 300 billion won. Given strong exports in the K-beauty segment and positive investor sentiment toward cosmetics ODM firms, applying a multiple of more than 10 times EBITDA is not seen as unreasonable, industry watchers said.
Hwasung Cosmetics is a company with strengths in color cosmetics ODM. Focused on eye makeup, it counts not only domestic indie brands but also global beauty giants such as L'Oréal and Estée Lauder as clients. Last year's revenue was about 110 billion won, and earnings before interest, taxes, depreciation and amortization (EBITDA) came to about 24 billion won. NOWCOS posted about 70 billion won in revenue last year.
Affirma Capital acquired a 70% equity stake in Hwasung Cosmetics in 2019 for about 140 billion to 160 billion won, securing management control. It then acquired NOWCOS in 2022, expanding its product portfolio to basic skincare.