“Korean L’Oréal” Goodai Global has secured a 800 billion won (estimated $610 million) investment from domestic private equity firms (PEF), with a pledge to go public within three years. As an emerging major player in the cosmetics mergers and acquisitions (M&A) market, Goodai Global has rapidly acquired a series of beauty brands. As a result, its corporate value now stands at 4 trillion won.
According to the investment banking (IB) industry on Aug. 7, Goodai Global is currently finalizing the terms of a convertible bond (CB) issuance with private equity fund (PEF) managers. With the deal to be sealed by the end of this month, Goodai Global has promised to go public within three years of its closing date. If the initial public offering (IPO) fails to materialize, the company will talk to guarantee a certain rate of return and buy back the convertible bonds (CBs) issued to investors.
The CB issuer pays a fixed interest to the investors and guarantees the principal repayment at maturity. If investors convert the CB into shares before maturity, they can aim for additional returns if the company’s value rises. However, Goodai Global is still a privately held company. As of now, both parties are under an agreement to enhance the stability of potential returns by establishing qualified listing requirements.
PEF managers have agreed to split Goodai Global’s CBs worth 800 billion won. South Korea’s leading PEF, IMM Private Equity (IMM PE) is expected to take 280 billion won, with IMM Investment taking 140 billion won. JKL Partners and Premier Partners are each projected to invest about 120 billion won. The remaining amount will be covered by Kiwoom Private Equity and Company K Partners, a venture capital firm.
Goodai Global’s capital raise is reportedly intended to finance the acquisitions of two other cosmetics companies: Seorin Company (600 billion won) and Skinfood (150 billion won). The financial investors (FIs) participating in this round are said to have judged the company’s valuation as relatively low, given Goodai Global’s rapid growth and strong potential for market expansion.
Although Goodai Global is valued at 4 trillion won, this deal marks its first investment round. The company spent several hundred billions acquiring several cosmetic brands, and financing them by bringing in FIs. Its partners include The Ham Partnership (acquired TIRTIR and Skin Food), Mirae Equity Partners and The Turning Point (Craver Corporation acquisition) and Company K Partners (Seorin Company acquisition)
Last year, Goodai Global’s EBITDA (earnings before interest, taxes, depreciation and amortization) was 130 billion won, but aggressive acquisitions have helped surge the EBITDA to 450 billion won. Since 2019, starting with “Beauty of Joseon,” Goodai Global has expanded rapidly by acquiring several small and mid-sized cosmetics brands over two to three years, including House of HUR, TIRTIR, Laka, and Craver Corporation.
A source from the IB industry said, “CBs have a maturity of seven years, with interest rates around 5%-6%, so from an investor’s perspective, it’s better to aim for capital gains by selling shares after Goodai Global’s listing.” The source added, “The company’s valuation at the time of listing will likely be set at a level that guarantees a certain return for the FIs.”