LVMH to invest $50m in K-beauty firm

[THE INVESTOR] L Capital, an affiliate of the world’s largest luxury brand group LVMH, will invest $50 million in CLIO, a Korean cosmetics company that specializes in makeup.

The K-beauty company aims to go public by the end of this year and will issue redeemable convertible preference shares which the investment company will take over. An official agreement for this pre-IPO investment will be signed next week, according to media reports.

CLIO’s sales surged to 107 billion won ($93.07 million) in 2015 with operating profit of 22.5 billion won boosted by an appearance in last year’s hit TV show, after almost two decades of posting mediocre turnover since it was established in 1997. Its total market value after IPO is expected to be more than 1 trillion won.

In 2014, L Capital first ventured into the Korean corporate world by investing 60 billion won in YG Entertainment, becoming the second largest shareholder of one of the top three entertainment companies in Korea.

As its second choice, it has turned to a local cosmetics company, reflecting the growing wave of interest in K-beauty. Demand is growing in the Asian market, especially in China: export of Korean cosmetics to China alone marked $1.09 billion in 2015, doubling from the previous year, coming in second after French cosmetics.

Recently, the Korean cosmetics industry has been attracting foreign capital. Last year, leading cosmetics company Estee Launder became a major shareholder of Have and Be, the parent company of Dr. Jart for an undisclosed sum. Goldman Sachs’ private equity fund took over Carver Korea that owns AHC earlier this year for 520 billion won. 

By Hwang You-mee (glamazon@heraldcorp.com)