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Pre-IPOs

Goldman Sachs joins race for Korea’s beauty store chain

By Nov 23, 2020 (Gmt+09:00)

Goldman Sachs Principal Investment Area (PIA) has entered the race for a stake in South Korea’s health and beauty franchise CJ Olive Young, becoming the only foreign bidder in a deal estimated at up to $405 million.

Goldman Sachs PIA was added to the shortlist for a stake in the country’s top beauty store chain, after sale manager Credit Suisse shortlisted five preliminary bidders composed of four Korean private equity firms and Hyundai Department Store last month.

CJ Olive Young’s family owners — CJ Group Chairman Lee Jay-hyun’s son and heir apparent Lee Sun-ho and the chairman’s brother Lee Jae-hwan — are selling some of their combined 28% stake in the franchise ahead of its planned initial public offering in 2022.

Market sources estimate the size of the stake up for sale at 20–30%. Based on its projected enterprise value of 1 trillion–1.5 trillion won, the stake is worth 300 billion-450 billion won ($270 million–$405 million).

Alongside a clear timetable for the IPO, the fact that the share sale is related to parent CJ Group’s ownership restructuring has drawn interest in the non-controlling stake in Olive Young, according to market sources. There is expectation that the parent group will come up with measures to enhance their corporate value, alongside the stake sale.

Goldman Sachs joins race for Korea’s beauty store chain

As the latest participant in the competition, Goldman Sachs PIA is working with Nomura and state-run Korea Development Bank’s M&A division.

Their entry was first reported by the Maeil Business Newspaper on Nov. 22 and a source with knowledge of the matter confirmed it.

The shortlisted Korean PEFs are IMM Private Equity, STIC Investments, JKL Partners and Glenwood Private Equity. Hyundai Department Store is the only strategic bidder.

They are required to submit final bids by around mid-December.

Back in 2014, Jay Hyun Lee, managing director and head of Goldman Sachs PIA Korea, led a 40 billion investment in Woowa Brothers, South Korea’s No.1 delivery app. Its stake has swelled 20-fold in value to 800 billion won, after Germany’s Delivery Hero agreed to acquire an 87% stake in Woowa for $4 billion last year.

As a unit of CJ Corp., Olive Young has 1,250 outlets across the country, selling a host of multi-brand cosmetics and health supplements with 50% share of the domestic beauty market.

Write to Chae-Yeon Kim at why@hankyung.com

Yeonhee Kim edited this article.

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