Indivision, the Mauritius-based private equity fund of Future Capital, has bought a 70% stake in Faces Cosmetics, a Canadian high-end cosmetics company listed in the UK, for an undisclosed amount. Consequently, Indivision will take management and strategic control of the company and partner with Pantaloon Retail to bring the company’s products into the Indian market.
Pantaloon Retail managing director and Future Group CEO Kishore Biyani is understood to be personally involved in working out the India strategy, sources said.
Indivision Capital Management managing partner Atul Kapur said: “Faces is an innovative new-age personal care company. Its products will resonate well with the Indian consumer. In addition to continuing with its international expansion India is a critical market for Faces. We will shortly announce our full India strategy.”
Future Capital is the financial arm of Pantaloon Retail, the flagship retail company of Future Group. Faces Cosmetics said it has received 5 million stg in funding from Indivision, a private equity fund owned by Indivision Partners, through a subscription for 125 million shares.
Following the subscription, Indivision will have an interest in 70.60% of the enlarged issued share capital. Faces Cosmetics has agreed to grant warrants over 48.75 million shares to Indivision, with exercise price between five and seven pence a share, and warrants for over 20 million shares to the president and chief executive Ramesh Jolly, with exercise price between six and 10 pence per share.
Further, the company has agreed to grant warrants to Charterhouse over 20.2 million shares for strategic advice provided to the company. Indivision’s maximum shareholding, upon exercise of its warrants in full, will be 76.95% of the issued share capital.
Faces was established 32 years ago and was bought out by Dr Ramesh Jolly, an NRI based in Canada. Its mainstay is colour cosmetics and anti-ageing products that are targeted to a diverse range of women with varying skin tones and ethnicity, as well as to a range of age groups, including teenagers and more mature women.
The company’s chief executive Ramesh Jolly listed the company in the UK to raise the profile of the company in the UK, before the company’s planned expansion there.
Currently, the company has 54 retail outlets, which includes 35 in Canada, 16 in Mexico, two in the US and one in Ireland. In the US, the company has a presence through a store in Puerto Rico, as well as a recently opened store in Arlington, Texas. In April this year, it had signed a MoU with VLCC for its foray into the country.
The company mainly operates through a franchise model whereby third parties acquire the right to operate its branded retail sites within shopping centres and other retail locations.
India’s beauty market is barely 10% of the global market of over $36 billion, but low per capita spending on these products so far offers impressive growth opportunities, believe market experts. The segment is growing at over 35% according to rough industry estimates.
Personal care companies are focusing in a big way on India given the Indian consumer’s rising spends on personal care and grooming, growing disposable incomes and a rather unpenetrated market.
Source: Economic Times