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Eurazeo Sells Majority Stake in Nest to North Castle Partners

The deal values Nest at $200 million.

Nest has a new but somewhat familiar majority owner.

Investment company Eurazeo has sold its majority stake in the home scent and fragrance company to an investor group led by private equity firm North Castle Partners, in a transaction that values Nest at about $200 million. Terms of the deal were not disclosed.

Eurazeo and Nest founder Laura Slatkin will retain minority ownership positions.

North Castle Partners will be familiar to Nest as beauty industry adviser Rich Gersten was at Tengram Capital Partners when it was Nest’s main backer and subsequently sold its majority stake to Eurazeo in 2017 for $70 million. Nest represents North Castle’s second beauty and personal care investment in the last two years.

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“I think it’s amazing that someone that invested in the brand before wants to invest in the brand again,” said Jill Granoff, managing partner of Eurazeo and chief executive officer of its Brands division, in an interview. “I think that speaks to the strength of not only the category but the brand itself, the performance it’s achieved and the leadership team.”

While she declined to give specific sales numbers, Granoff added that overall brand sales tripled, direct-to-consumer sales increased tenfold and EBITDA margins significantly expanded since 2017 when Eurazeo’s Brands division launched with Nest as its debut investment.

“We have healthy margins and consumer love is just phenomenal so we thought that now was the time to bring in a partner and as you know we’re staying on board so that we can build upon the strong foundation,” she added.

For his part, Gersten told WWD that “investing in something you know and understand is always less risky than investing in something brand new.”

“We’ve been involved in the brand for five years successfully and watching its success in the subsequent four or five years since it was initially sold just obviously gave me great confidence in what I always knew — it’s a great brand with a loyal consumer base and a lot of growth,” he explained.

North Castle does not plan to change the executive leadership team, with Maria Dempsey and founder Laura Slatkin remaining on as CEO and executive chairman, respectively.

Under the new investment the main focus will be international and category expansion, with Nest launching in the U.K. last year through Cult Beauty and recently making its debut in Selfridges.

Elsewhere, it is gearing up to introduce the brand in Sephora Middle East, before expanding further into Europe and moving into China, as well as having a deeper focus on wellness.

“When we think about the future roadmap the next three to five years, it’s really all about expanding our product categories and really leaning into wellness and leaning into fine fragrances and also geographic expansion,” Dempsey said. “We are number one in the U.S. in terms of home fragrances and a top 10 fine fragrance brand at Sephora, but the world is out there for us.”

As for recession fears, Slatkin believes that fact that it managed to perform well during its launch in the 2008 financial crisis that saw consumer spending slump means t is somewhat recession resistant.

“As we embark on our next five years, with Rich and North Castle on board — and Eurazeo’s continued participation — I see us developing a powerful roadmap together to expand the brand across categories and around the globe,” she said.