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With TPG Stake, What’s Next for Anastasia Beverly Hills

The social media-savvy makeup brand plans to use its capital to fund global expansion and ramp up direct-to-consumer sales.
Anastasia Beverly Hills Amrezy highlighter look | Source: Facebook
  • Cathaleen Chen

LOS ANGELES, United States — Anastasia Beverly Hills has sold a minority stake to private equity firm TPG Capital, the companies said Wednesday, as the makeup brand plans a global expansion and increased direct-to-consumer sales.

Los Angeles-based Anastasia was one of the most sought after brands to hit the market in recent years, attracting interest from private equity firms and beauty conglomerates. The company, founded by Anastasia Soare in 1997, grew from a Beverly Hills salon known for eyebrow grooming for the stars into a cosmetics empire. Soare was an early adopter of social media marketing strategies that are now the norm in the beauty sector, and her brand now counts 17 million followers on Instagram.

“We really want to ramp up the Anastasia Beverly Hills website. It’s hard when we compete with our own retailers that have amazing footprints,” said Claudia Soare, president of Anastasia and daughter of the founder, pointing to the digital prowess of sites like Sephora and Ulta. “We want to find smarter ways for consumers to come to us.”

As part of its digital strategy, Anastasia will be courting customers through new features like videos and how-to-tutorials on product pages as well as better mobile integration, she said. The company also plans on expanding its distribution in Asia (excluding China), Southeast Asia and Europe with Sephora.

It was social media-fuelled growth, however, that made Anastasia an attractive asset, said Justine Mannering, a managing director investment banking firm Alantra. The companies did not disclose financial terms, but media reports value the brand at $3 billion, representing a multiple of nine times it has reported $340 million in net sales. That compares with an average four times net sales for private equity investments in beauty brands last year, according to Alantra.

Beauty valuations have been rising in recent years, Mannering said, adding that the price TPG paid for its Anastasia stake reflects “fast growth at a significant scale and an ability to monetise their social media following.”

The makeup and skincare space has seen a flurry of deals at high valuations in recent years, attracting venture investors, private equity funds and strategic players alike. Last year alone saw more than 100 deals, including private equity firm TSG Consumer’s minority stake in Huda Beauty, as well as Jergens parent company Kao Corporation’s acquisition of Oribe haircare. The price tag of the latter deal was said to reach $400 million, or almost five times its revenue.

TPG has invested in a handful of beauty brands, including e.l.f and Beautycounter in 2014, and Ipsy in 2015. With its eyes set on global expansion, Anastasia Beverly Hills chose the San Francisco- and Fort Worth, Texas-based firm because of its tech-forward portfolio, Claudia said.

While some of these companies were not beauty brands, they were “like-minded partnerships,” she added, referring to Uber and Cirque du Soleil.

The cult make-up brand, led by Soare who is also chief executive, began looking for investment partners late last year, according to Women’s Wear Daily.

Anastasia reports $200 million in earnings before interest, taxes, depreciation and amortisation, according to the WWD report. That compares to e.l.f.’s $270 million in revenue in 2017.

Anastasia tapped Imperial Capital as its financial adviser. Goldman Sachs, RBC Capital, UBS Investment Bank and Deutsche Bank served as financial advisers to TPG and are financing the deal.

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