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Bernard Arnault's Beauty Bets Pay Off in China

As the Chinese beauty industry grows, one of several cosmetic firms backed by Arnault's private equity investment fund is poised to go public in Shanghai.
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By
  • Bloomberg

PARIS, France — Bernard Arnault's good fortune is rubbing off on some of China's biggest skin-care companies and their founders.

The French fashion tycoon, who supplanted Microsoft Corp co-founder Bill Gates as the world’s second-richest person this week, achieved that milestone with a little help from Chinese consumers.

Guangdong Marubi Biotechnology Co, one of several Chinese cosmetic firms that count on an Arnault-backed private equity fund as an investor, is poised to go public in Shanghai as early as this month, a listing that will make 49-year-old founder Sun Huaiqing a billionaire in his own right. A company spokesman declined to comment.

“Many people think listing is a symbol for success, but I don’t think so,” Sun said in an 2015 interview posted on the company’s website. “An IPO is just a start.”

Marubi reported 2018 revenue of 1.6 billion yuan ($233 million), more than half of it from skin-care products, according to a prospectus. Almost 80 percent of stores that sell its products are outside the biggest cities, making the firm a regional powerhouse with room for expansion.

“The Chinese beauty industry remains fragmented and any good brands with some best-selling products should still see a lot of room to grow,” said Mavis Hui, an analyst at DBS Bank in Hong Kong. Beauty sales, which reached about $6 billion in China last year, may increase in the high single digits annually over the next three to five years, she said.

Arnault, one of only three people worth more than $100 billion, along with Gates and Amazon.com Inc’s Jeff Bezos, has helped other emerging fashion moguls in Asia. L Catterton, the private equity vehicle backed by his luxury-goods powerhouse LVMH as well as Groupe Arnault, has investments in 25 brands across the continent, according to its website.

In 2011, L Catterton took a stake in Trendy China Group, which owns the Ochirly and Miss Sixty fashion brands. Trendy founder Jacky Xu is worth $1 billion, according to the Bloomberg Billionaires Index.

The family behind another L Catterton-backed fashion firm, Xin Hee Co, is worth $323 million. Xin Hee, which makes mid to high-end women’s clothing, reported 1.8 billion yuan of revenue last year.

By Venus Feng; editors: Pierre Paulden, Peter Eichenbaum, Steven Crabill.

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