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Bain sells South Korea’s top Botox maker for $1.5bn

Bain Capital Holdings updates

Private equity group Bain Capital has sold its controlling stake in South Korea’s leading Botox maker to a consortium of investors for $1.5bn as the Covid-19 pandemic fuels a surge in demand for cosmetic surgery in the country.

Seoul-based Hugel, founded in 2001, is South Korea’s biggest producer of botulinum toxin. It also makes dermal facial fillers, which are used to reduce wrinkles. The company has tapped into booming local demand and rising popularity globally for beauty-focused medical products.

The consortium that bought Bain’s 46.9 per cent equity interest was led by Singapore’s CBC Group and also included Abu Dhabi sovereign wealth fund Mubadala, Korean family-controlled conglomerate GS Holdings and local private equity fund IMM Investment.

Shares in Hugel fell 7.6 per cent in Seoul on Wednesday following the deal’s announcement, but were still up more than 10 per cent this year.

“Bain’s exit has fuelled concerns about Hugel’s expansion abroad, including the US market,” said Albert Yong, managing director at Petra Capital Management, a Seoul-based hedge fund that is invested in Hugel. “The price tag seems expensive, considering such concerns.”

For Bain, the sale marked a robust return on its 2017 investment of $816m.

The deal came as Seoul has cemented its reputation as an Asian hub for plastic surgery. One in three South Korean women in their 20s say they have had cosmetic surgery.

The coronavirus pandemic has further boosted the popularity of plastic surgery in the country, as homeworking and fewer social interactions made people less self-conscious about post-surgery bandages, industry watchers said.

Hugel reported record earnings last year, with its operating profit increasing 15 per cent to Won78.2bn ($670m) on sales of Won211bn. Botox and facial fillers accounted for more than 90 per cent of the company’s sales, with the group enjoying a beefy 37 per cent operating profit margin.

Hugel sells its Botox products in 28 countries in south-east Asia and Latin America.

Last October, it became the first South Korean company to receive Chinese approval to sell Botox products in the world’s second-biggest economy. It is one of four foreign companies selling Botox in China.

Hugel set up a Chinese subsidiary in Shanghai in March to boost its expansion in the country, where analysts estimated the Botox market was worth about $857m. Hugel is aiming to grab 30 per cent of the fast-growing Chinese market.

It is also seeking approval from health authorities in Europe and the US to enter both markets, which combined account for about 70 per cent of global Botox sales. 

Seo Mi-hwa, analyst at brokerage Yuanta Securities, expected Botox sales in China and other markets to increase in the second half of the year as lockdowns eased. She forecast that Hugel would earn EU approval for its Botox products this year and get the green light from the US in 2022.

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