The Private Equity Pitch identifies private equity-owned portfolio companies that are ripe for an exit in a particular sector and/or geography.

Private equity funds have long been investing in pharmaceutical services. Drawing on that track record, some are now starting to see the allure of an adjacent sector: cosmetics manufacturing and outsourcing.

Pharmaceutical services companies have historically helped biotech and pharma companies develop treatments and manufacture ingredients, and that same partnership is now increasingly being explored in the cosmetics sector for new and old players.

Established companies look to outsourcing for efficiency in product development and sales, while emerging brands choose contract manufacturing services to swiftly introduce their products to the market.

Private equity deals in the space last year include the acquisition of Fiabila, a global cosmetics contract development and manufacturing organisation (CDMO) specialising in nail products, by pan-European mid-market private equity investor Apheon. The business’ estimated EBITDA of EUR 25m in 2022 was expected to grow to EUR 30m in 2023, as reported.

Sophim, a French family-owned company specializing in the manufacturing of natural ingredients for the cosmetic industry, also completed a EUR 20m funding round led by PE firm Smalt Capital last year.

Sponsors like the sector as it is similar to pharmaceutical services and its cash flow and revenue streams are often predictable, particularly for specific, well-known, and luxury brands. The end market of the cosmetics industry is projected to globally be worth USD 580bn by 2027 with an annual growth rate of 6%, according to a report by McKinsey.

However, the consumer sector will remain more subject to pressures on discretionary spending than its pharmaceutical peer. Last year, the heightened cost of capital led Gotha Cosmetics‘ sponsor Capvis to change the company’s focus to potential acquisitions after pulling a sale process launched earlier in the year, as reported.

Elsewhere, the sector is seeing the start of buy-and-build platforms. Prevost Laboratory Concept, a France-based cosmetics, food supplements and animal care solutions producer and packager backed by IDI [EPA:IDIP], acquired Creapharm Cosmetics, a CDMO specialized in the formulation, manufacturing and packaging of cosmetic products.

Looking ahead, the sponsor backers of Italy-based contract cosmetics manufacturer Intercos [BIT:ICOS] could consider a sell-down, as reported, while the firm is looking to grow through acquisitions.

by Ero Partsakoulaki with analytics by Manu Rajput

Cosmogen – with an LTE* score of 11/100
Sponsor: MBO & Co (held 86 months)
The Deal: In December 2016, MBO acquired French manufacturer of accessories and packaging Cosmogen alongside the management team led by Renaud van den Berg.
The Fund: MBO Partenaires 4
Senior Management: Priscille Caucé (President and CEO)
Most frequent Advisors: Clearwater International (3 deals), Lamartine Conseil (4 deals)

Ceuta Group – with an LTE score of 26/100
Sponsor: Juggernaut Capital Partners (held 115 months)
The Deal: In June 2013, Juggernaut Capital Partners made an investment in Ceuta Healthcare Group, a health and beauty products outsourcing firm in the UK.
Add-on acquisitions: Orchid Field Marketing (2016)
Senior Management: Edwin Bessant (CEO), David Skinner (CFO)
Most frequent Advisors: Lincoln International (1 deal), Morgan Lewis & Bockius (2 deals)

Vabel Cosmetics – with an LTE score of 23/100
Sponsor: Naxicap Partners (held 34 months)
The Deal: In March 2021, Naxicap Partners and Nord Est Partners acquired majority stake in France-based Vable Cosmétique, a manufacturer and distributor of luxury brand perfumery and cosmetics bottles.
Add-on acquisitions: Sarbec (2023)
Senior Management: Christophe Sallès (President), Pascal Magne (MD)
Most frequent Advisors: JPMorgan (11 deals), Lamartine Conseil (8 deals)

Calyxia – with an LTI** score of 3/100
Sponsor: Astanor Ventures (held 28 months)
The Deal: In September 2021, French company Calyxia received EUR 15m in growth money, mostly from the partly Belgian investment fund Astanor Ventures.
Senior Management: Jamie Walters (CEO and Co-founder), Patrice Lataillade (CFO)
Most frequent Advisors: Allen & Overy (1 deal)

Coptis – with an LTI score of 2/100
Sponsor: Clearsight Investments and Extens (held 28 months)
The Deal: In September 2021, Coptis, a French publisher of software for cosmetics producers, received investment of an undisclosed amount from Extens, a PE firm dedicated to the e-health sector, and Swiss private investment company Clearsight Investment.
Senior Management: Anne Karagoz (Founder and President)
Most frequent Advisors: Mortier & Associes (1 deal), Chammas & Marcheteau SELARL (4 deals)

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction. 

**Mergermarket’s Likely VC Exit predictive analytics assign a score to VC-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.