IMM private equity firm to sell Able C&C’s Missha cosmetic brand

IMM Private Equity made the decision to sell Missha, a South Korea-based skincare and cosmetics manufacturer owned by Able C&C Co. The PEF firm is unloading the brand due to losses as the consumers shift to online shopping and opt for high-end brands.

The sale of Missha was also due to the losses after sales from Chinese tourists tumbled since their visits to South Korea have declined. Able C&C is now up for sale just five years after IMM PE acquired a controlling stake in the company for KRW400 billion or around $287 million.

As per The Korea Times, after the private equity firm purchased the stake in 2017, it has been having a hard time boosting the company's corporate value. It also finds it very difficult to increase or improve its acquired cosmetic manufacturer's profitability.

Moreover, IMM's problem got worse after it failed to deal with the losses and issues brought about by the COVID-19 pandemic and the fast-changing market trends. With most shoppers buying their cosmetics online or in multi-brand store outlets, Able C&C's Missha could not bring in customers to its shops, thus, sales are not coming in as well.

With these difficulties, it is clear why IMM is now unloading the cosmetic brand. For the merger and acquisition deals, the PEF company tapped Credit Suisse to handle the sales process. The sale price is predicted to be much lower compared to how much IMM spent to acquire Able C&C five years ago.

Perhaps, the selling price could be half of the KRW400 billion that the private equity firm paid for. Also, this is the estimated price based on Able C&C's current market cap as of Friday, Sept. 16, which stands at about KRW171.3 billion only.

"The corporate value of Able C&C decreased due to several reasons following the acquisition," Kim Young Ho, IMM's chief executive officer, said in a statement to local media last week. "But the company succeeded at turning a profit this year, and IMM aims to find a buyer who acknowledges its reasonable price."

In any case, IMM only incurred losses since it invested in the cosmetics company in 2017. Its overall ownership percentage in the company is 59.2% which was acquired in two separate deals.

Meanwhile, The Korea Economic Daily reported that the IMM already has candidates for the acquisition of Able C&C, and these are mostly rivals that are looking to boost their product lineup. Some fashion platforms such as Musinsa, which has recently launched its own cosmetic product line, are also expected to bid.