NEW YORK — E.l.f. Cosmetics is looking to get a lot bigger.
This story first appeared in the February 3, 2014 issue of WWD. Subscribe Today.
TPG Growth, the middle-market, growth-equity investment arm of TPG, has acquired a majority stake in the fast-growing value brand, with an eye on broadening the reach of E.l.f., especially on a global basis.
The investment firm purchased the business Friday from E.l.f.’s founders and TSG Consumer Partners LLC. Terms of the transaction were not disclosed, but reports suggested E.l.f. could fetch between $200 million and $300 million.
E.l.f., which is distributed in major mass doors such as Target, in its own freestanding unit in Manhattan and through its e-commerce site, has estimated annual sales of just more than $150 million, according to industry sources. The portfolio includes products for eyes, lips and face as well as tools and nail color, mostly priced less than $3. Despite its mass pricing, E.l.f. has established a reputation for innovation that company cofounder Joey Shamah hopes to extend upon under TPG.
“Our team is proud of what we have built and are extremely excited to have a value-added partner like TPG Growth to help us scale the business,” said Shamah. “Their track record in building consumer businesses, international distribution relationships, e-commerce capabilities, global operational resources and access to incremental talent make them an ideally suited partner for our company.”
For TPG, E.l.f. brings a brand positioned in the value segment of the market with omnichannel expertise. “Through its differentiated approach, E.l.f.’s offering has resonated among a key segment of the cosmetics market,” said John Bailey, principal at TPG Growth. “We see opportunities for growth in a thoughtful way through expansion in key distribution channels and a push to make E.l.f. a global player. There is synergy with many of our businesses. We understand consumer, fashion and retail and can certainly help with distribution both domestically and on the international front.”
Shamah thought the time was right to take the business to the next level. “We were looking for a financial sponsor because we feel there is still growth in our tank,” he added in an interview with WWD just as the deal closed last week.
“TPG is a company that understands our business and can help us in key areas such as supply chain improvements and international distribution,” Shamah added. His goals include expanding beyond the 15,000 doors currently stocking the brand with a deeper push into discount chains, as well as drugstores, dollar stores and international retailers.