Carlyle Group, the world’s second-largest private equity fund, has reportedly set its eyes on It’s Skin, a budget Korean cosmetic brand under Hanbul Cosmetics.

According to market insiders and media reports, Carlyle has offered around 2 trillion won ($1.97 billion) for the deal, which is about 10 times It’s Skin’s earnings before interest, taxes, depreciation and amortization. The EBITDA is used to measure a company’s profitability and ability to create cash flow. 

“Carlyle has been interested in the Korean cosmetics market due to the soaring demand among Chinese customers. Moreover, once the Korea-China free trade agreement comes into effect, the high tariff on Korean cosmetics will be reduced, sparing more growth opportunities there,” a source was quoted as saying to Money Today newspaper.

It’s Skin has been widely popular with not only Chinese tourists but also in European countries with its bestselling “Prestige Creme D’escargot.” The jar of processed snail slime was named one of the top five best-selling beauty products at the Lotte Duty Free Store during the Chinese national holiday season of Oct. 1-7 last year.

It’s Skin, with its reported sales of 370 billion won, has become the main pillar of Habul, with reported sales of 39.2 billion won.

“Carlyle has already seen success in both Korean M&As and operating a cosmetics company. It acquired domestic security company ADT CAPS for $19 billion last year. It has also had a history of successfully reselling German beauty company ADA Cosmetics. It will be a win-win situation for Carlyle and Hanbul which is short of cash,” a market analyst said.

Carlyle’s director of communications for Asia, Brian Zhou, declined to “comment on market speculations.”

By Bae Ji-sook (baejisook@heraldcorp.com)