Chinese Investor Entered the Bidding for Luxury Beauty Brand Aesop

Despite inflation and volatility in the global beauty industry, there are indications of a recovery, particularly in the Chinese market.

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Chinese investment management firm Primavera Capital has entered the bidding with the global leading cosmetic company L’Oreal and PE firm Permira for acquiring a stake in the luxury beauty brand Aesop, people with insider information of the matter said. It is said that the Chinese investment firm Primavera Capital has completed the latest round of bidding to acquire stake in Aesop but the deal is still ongoing.

As early as October 2022, it is reported that the Brazilian beauty giant Natura & Co was working with Bank of America and Morgan Stanley to sell a minority stake in its Australian skin care brand Aesop, potential bidders include Shiseido Group, L'Occitane Group and private equity giant CVC Capital Partners. The deal could value Aesop at about $2 billion.

According to Aesop's official website, its product line covers skin care, body and hand care, hair care, perfume and household products.

In 2013, Natura & Co acquired 40% of the equity held by Harbert Private Equity and 25% of the equity from the founder, with a total transaction value of A$ 68.25 mil (USD 45.86 mil), becoming the largest shareholder of Aesop. In 2016, after several following acquisitions, Aesop was wholly owned by Natura & Co.

According to Natura & Co's financial report, In the 2022 fiscal year, Natura & Co Group delivered R$ 36.350 bil （USD 7.18 bil） in net income, with a year-on-year decrease of 9.5%; the gross profit achieved R$ 23.2 bil (USD 4.59 bil), down 11% year-over-year in BRL compared to the previous year.

Despite the decline in overall performance of Natura & Co, Aesop became the only segment delivered growth for the group in the fiscal year of 2022.

Net income of Aesop increased by 4.6% to R$ 2.719 billion (USD 536.95 mil) in 2022. The company again achieved another quarter of double-digit growth in constant currency, up 18.2% (-2.1% in BRL). All regions delivered double-digit growth despite the challenging environment.

Natura & Co stated that the highlight of the fourth quarter in the fiscal year of 2022 was Aesop's successful China market entry, with the launch of two physical stores, along with the Aesop.com platform and a domestic T-Mall operation. 

Before deciding to sell Aesop, Natura & Co had tried to spin off Aesop for IPO. Then several major international cosmetics groups such as L'Oréal, LVMH or Shiseido showed interest in acquiring Aesop, the Brazilian cosmetics giant said it was "still evaluating the feasibility of selling its stake in Aesop, as one of the strategic options "will enable the group to provide fund for Aesop's growth and deliver further value to its shareholders.

It is said that discussions of the deal are ongoing and no final decisions have been made on the size or timing of the sale of any stake. Natura & Co did not respond for the detail of the deal, while Primavera declined to comment.

The Brazilian beauty giant Natura & Co said earlier this month it had received non-binding offers to sell Aesop in whole or in part and is still under discussion. It is said that he move is part of a reform of Natura & Co, which was led by Fabio Barbosa, who became the chief executive officer last year.

Primavera Capital Group is an investment firm that focuses on private equity and special situations opportunities. Primavera invests across the full life cycle of a business, from early-stage venture funding to late-stage growth capital, private credit, restructuring financing, carve-out/ spin-off, and full buyout. The company was founded in 2010 and is based in Beijing, China.

The global beauty industry has been facing challenges due to the COVID-19 pandemic in recent years. However, as the epidemic control measures are relaxed in some countries, including China, there are indications of a recovery in the beauty industry. Many global beauty companies are eyeing the Chinese market as an opportunity to overcome the challenges they are facing.

The recent acquisition of Aesop by a Chinese investor also suggests that there is optimism about the recovery of the beauty industry in China. This acquisition indicates that Chinese investors see the potential in the beauty industry and are willing to invest in it. It also shows that Chinese companies are interested in acquiring high-quality international brands, which could help them to expand their presence in the global beauty market.

Overall, despite inflation and volatility in the global market, there are indications of a recovery, particularly in the Chinese market. Many global beauty companies are looking to expand their presence in China, and Chinese investors are showing interest in the industry. This suggests that there is still significant potential in the beauty industry and that it remains an attractive market for companies and investors alike.