Asia's Largest Supplier of Cosmetic Packaging HCP Will Be Acquired

Carlyle Group, an American private equity company, plans to acquire HCP, a Chinese cosmetics packaging material supplier, with US $1 billion (about RMB 6.769 billion). Baring Private Equity Asia, the owner of HCP, invited bids for the sale of HCP in early 2020, but the sale plan was shelved due to COVID-19. HCP is a well-known cosmetics packaging material supplier in the world, whose service brands include Estee Lauder, Clarins, Pechoin, Proya, Perfect Diary, etc.

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Carlyle Group, an American private equity company, plans to acquire HCP, a Chinese cosmetics packaging material supplier, with us $1 billion. A person familiar with the matter said that Carlyle had finalized the final details of the agreement with Baring Private Equity Asia, HCP’s owner. Carlyle Group is expected to obtain regulatory approval and complete the transaction in the coming months.

Baring Private Equity Asia purchased HCP from rival TPG Capital in 2016 for an undisclosed sum. Then HCP partially expanded by purchasing SIMP in the same year, Germany's Rusi Cosmetics the following year, and another packaging company in 2020.

Baring Asia seems to have shelved the sale of HCP in March due to concerns about the valuation of HCP. The previous offer of $1.5 billion attracted the interest of private equity such as Primavera Capital, PAG and DCP Capital.

HCP was established in Taiwan, China in 1960, mainly producing lipstick, compact foundation box, mascara and other cosmetics packaging materials and skin care packaging materials. It’s the largest cosmetics packaging materials manufacturer in Asia, who has served many cosmetics brands including Estee Lauder, Clarins, Lancome, MAC, Maogeping, Perfect Diary, etc. It is reported that the lipstick jointly signed by MAC and Arena of Valor and Mao Geping Palace Museum series are all using packaging materials from HCP.

HCP once said in an interview: "Our global sales reached US $400 million in 2019, of which 80% of the products were manufactured in Chinese Mainland. In addition, Iin the “Double 11” of 2019, only two of the top 30 brands in beauty sales were not our customers."

Industry insiders say that in the field of cosmetic packaging materials, whether it is production capacity or manufacturing quality, China is leading. A very obvious phenomenon is that both Chinese brands and international brands are using Chinese packaging products.

Gotha Cosmetics, an Italian cosmetics supplier, also purchased a majority stake in Chinese Cosmetics maker Suzhou iColor Biotech this year.

"Through this acquisition, Gotha's production capacity will be strengthened and its global influence will be enhanced. Gotha is going to enter the steadily growing Asian market, especially the Chinese market," said Paolo valsechi, CEO of Gotha.

Suzhou iColor Biotech, founded in 2018, is a Chinese cosmetics OEM and ODM enterprise integrating cosmetics, skin care products, formula development, filling, packaging material design and development, and product processing and production. Its main production projects are skin care products.

In recent years, there have been more and more cases of international enterprises acquiring Chinese cosmetics factories. This is because compared with their own factories, the acquisition of more mature local factories in China, whether in terms of staffing or localization, can help these enterprises layout the Chinese market more quickly.

Moreover, in the background of the epidemic normalization, with logistics congestion, long time-consuming and high transportation costs, the acquisition of Chinese factories for these enterprises, will be more conducive to their implementation of the strategy of "Taking China as the center and developing the Asian market".