US asset manager giant KKR has joined the K-beauty wave by acquiring cosmetics packaging company Samhwa, positioning itself to capitalize on the booming market.
On Thursday, the asset manager announced it has acquired Samhwa from US-based private equity fund TPG in a deal valued at 733 billion won ($527 million).
Founded in 1977 as a mold manufacturing company, Samhwa is a leading supplier of cosmetic packaging, proving packaging solutions to more than 300 cosmetic brands at home and abroad.
Samhwa is recognized for its airtight cushion packaging, a key technology in the sensational Korean cushion foundation compacts that swept the global beauty industry. Last year, the company posted sales of 186.8 billion won with an operating profit of 31.4 billion won on a consolidated basis.
KKR's acquisition of Samhwa deal comes amid the booming popularity of the local cosmetics industry. Korean cosmetics exports in the first half of the year reached $5.5 billion, up 14.8 percent from a year earlier and marking an all-time high, according to data released by the Ministry of Food and Drug Safety in July.
While KKR described Samhwa as being at the “heart of the K-beauty ecosystem” in announcing the acquisition, the global asset private equity giant is assumed to have bet on the Korean manufacturer’s ability to stably supply its products to a wide range of brands.
“Big-name private equity funds are often reluctant to invest in consumer goods because trends change rapidly. It seems that KKR has bet on a manufacturer capable of weathering market fluctuations in the fast-evolving beauty sector,” an official from a local private equity firm said.
With 60 percent of its revenue coming from global cosmetics giants such as L’Oreal, Estee Lauder, Chanel and LVMH, Samhwa said it will use KKR’s global network to expand ties with leading luxury brands.
Though KKR has a long track record of investing in Korean businesses, the latest acquisition marks its first investment in the domestic cosmetics sector. Its previous investments in the country include fashion retailer Musinsa, energy provider SK E&S and recycling firm Ecorbit.
Similar to KKR, other industry heavyweights are also looking into taking a bite of the burgeoning sector.
Earlier this month, US asset manager Blackstone announced it had agreed to make an investment in Juno, a Korean premium hair salon chain, without disclosing the financial terms of the deal.
Some are also eyeing aesthetic medical device companies as an extension of the K-beauty trend.
In 2022, Bain Capital invested about 670 billion won to acquire a 60 percent stake in Classys, a maker of skin treatment devices. Last year, French health care-focused private equity firm ArchiMed also acquired Jeysis Medical, another maker of aesthetic devices based here.
silverstar@heraldcorp.com
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