Private equity firm Tengram Capital is buying a majority stake in prestige skin-care brand Algenist for about $20 million. Tengram is acquiring the stake from biotechnology firm TerraVia.

Algenist makes antiaging and color correcting skin-care and cosmetic products that use alguronic acid and microalgae oil, which was created by Terra Via. The brand launched in 2011 and is distributed in 23 countries through Sephora, Ulta Beauty and QVC. Under Tengram, Algenist chief executive officer Frederic Stoeckel will continue to lead the brand.

“What’s key is the fact that we are becoming a standalone entity with Tengram, and that’s going to be with the support and the means we need to keep growing the brand,” Stoeckel said.

“The opportunity is to keep building our brand assortment in the right way,” he added. “We have expanded to makeup recently with the launch of a color collection line and we are going to keep building up — not just in skin care but in makeup as well. That will be a big driver for us.”

The brand had about $23 million in product revenue for 2015, down about $1.2 million from the prior year, according to a filing with the U.S. Securities and Exchange Commission. That drop was attributable to fewer airings on QVC.

“We’ve seen really good growth on the brand in our core retail channels,” said TerraVia cofounder, chairman and ceo Jonathan Wolfson. Under the terms of the deal, Tengram will pay TerraVia $20 million for an 80 percent stake when the deal closes, which is expected to happen before the third quarter ends. The firm will also invest fresh capital into Algenist. TerraVia will retain the other 20 percent of the business.

“We think the brand has enormous prospects,” Wolfson said. “We didn’t want to give up the ability to benefit from where it goes next, but we’re not brand builders here. We really felt like it was critical now to bring in real expertise to help get the brand to the next level.”

Tengram’s other portfolio companies includes This Works, Laura Geller, DevaCurl, Cos Bar and Nest.

The acquisition gives the firm a foothold in the fast-growing gray area between skin care and makeup. Products that emphasized complexion preparation grew in 2015, according to the NPD Group, which reported that makeup primers and CC creams alone brought in $490 million to the beauty industry in 2015. 

Algenist launched its first foray into the color category in February with Reveal, a line that uses microalgae-based species to color correct and improve the skin’s tone and radiance. The formula uses naturally occurring red, blue, green and golden algae to camouflage skin imperfections, while also aiming to provide antiaging benefits.

“There is a lot of opportunity with the ingredient technology that we have to provide those benefits,” said Richard Gersten, a partner at Tengram, about color correction.

Aside from Reveal, the company’s product lineup includes Genius Ultimate Antiaging Cream, Power Advanced Wrinkle Fighter Serum, Genius Ultimate Antiaging Vitamin C+ Serum, Advanced Antiaging Repairing Oil and many other products.

Tengram and TerraVia plan to work together to continue to identify other opportunities to use algae-based ingredients across “all segments of the beauty industry,” the companies said. That plan includes the potential for other Tengram-led investments where the algae technology could be utilized.

“Algenist is a unique brand in the prestige skin-care market, with a distinct positioning and unique and proprietary ingredients,” Gersten said. “The recent bridge into color cosmetics leveraging the patented ingredient technology creates tremendous potential for the future growth of the brand. We are looking forward to working with the existing team and leveraging our beauty industry expertise to drive continued growth across all global markets. We are also excited about the broader partnership with TerraVia and believe that there are great opportunities to create value.”

Rothschild & Co. advised TerraVia on the deal.

Tengram’s latest acquisition follows a slew of others in the beauty space. L’Oréal has been on an acquisition spree, inking deals for IT Cosmetics, Société des Thermes de Saint-Gervais-les-Bains and the license to use the Saint-Gervais Mont-Blanc beauty brand, as well as Atelier Cologne. Shiseido has signed multiple acquisition agreements as well, to pick up the Dolce & Gabbana fragrance license, plus Laura Mercier and ReVive. And Castanea Partners and Main Post Partners are in the midst of teaming up to buy Becca Cosmetics in a deal worth about $200 million, sources have said.

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