NEW YORK — E.l.f. cosmetics has taken on a minority investment from TSG Consumer Partners, a private equity firm focused on branded consumer products.
TSG is known in the beauty business for its efforts to enhance brands, such as Smashbox, which resulted in the sale of the cosmetics line to the Estée Lauder Cos. Inc., as well as its efforts with Pureology, which was acquired by L’Oréal. The firm also has stakes in beauty firms Perricone MD and Alterna.
TSG’s investment should help e.l.f. further grow its mass market beauty business via the Internet, in more brick-and-mortar stores and through larger international distribution network. Industry sources estimate e.l.f.’s retail sales range between $70 million and $80 million.
“We are proud of the brand we have built and we’re excited about the significant growth opportunities ahead,” said Joey Shamah, founder and chief executive officer of e.l.f. “We have had tremendous success online and with our current retailer partners, such as Target, and we feel there is great opportunity to expand further into the retail space across different channels. We want to take it to the next level.”
Shamah said a major impetus for the investment is to continue to expand e.l.f.’s Internet and retail business, while fortifying growth outside of the U.S. The products are available in 17 countries including the U.K., France and Australia and international volume could represent as much as 20 percent of sales in the years to come, the company said.
He added that TSG’s strong track record, experience, research and high success rate will help accelerate e.l.f.’s growth.
John Kenney, a managing director and partner of TSG, said e.l.f. fits with the firm’s practice of investing in high-growth brands with a differentiated value proposition for the consumer. “E.l.f. is rapidly carving out a growing share of a very vibrant, affordable cosmetic market,” said Kenney. “We are looking forward to working with Joey and the entire e.l.f. team to expand the scope and scale of the company, both domestically and abroad, in the years to come.”
Vennette Ho, a director at Financo, which advised e.l.f. on the deal, echoed the synergy message. “This transaction makes great sense for both e.l.f. and TSG,” said Ho. “By partnering with TSG, one of the leading private equity firms in the consumer space, e.l.f. can build upon its current successes to become a truly powerful global brand.”
Founded in 2004 by Alan Shamah and his son, Joey, e.l.f. achieved initial success online with beauty products priced at $1, $3 and $5. The company has been at the forefront of online marketing, including social networking and educational videos. The e.l.f. cosmetics Web site has grown to include more than two million members.
While Internet sales were strong over the holiday season, Shamah was enthused by seasonal success at Target and hopes to see further growth of business in drugstore chains, value retailers and mass merchants. He also sees room for e.l.f. at leading apparel retailers looking to build transactions. Also, e.l.f. executives hope to tap TSG’s vast consumer research and knowledge to develop more products on trend with shoppers’ demands. Shamah said, “We will continue to be fast to market, but we have relied on our instincts, [and] now we’ll have the depth of knowledge of their consumer research.”
E.l.f. isn’t the only beauty company starting the year with a cash infusion. Paris Presents Inc., known for its cosmetics accessories and implements, received an investment from private equity firm Mason Wells.Mason Wells, along with Paris Presents’ existing management team and other investors, acquired the equity of the company from the Zall family.
“We are proud of the business we have built and excited about the opportunity to partner with Mason Wells to continue the growth of Paris Presents,” said Larry Zall on behalf of the Zall family ownership group.“Mason Wells will provide Paris Presents with additional resources to achieve the company’s long-term growth initiatives and to continue our investment in industry-leading product innovation.”
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