Bain Capital sells management rights of Hugel to GS-led group for $1.5 bn

A consortium led by South Korea’s energy-to-construction conglomerate GS Group has acquired the country’s top botox maker Hugel Inc. from Bain Capital.

GS said on Aug. 25 that the consortium signed a share purchase agreement to buy 6.16 million shares, or a 46.9% stake, in Hugel at 1.7 trillion won ($1.5 billion). Of the total shares to be transferred to the GS-led consortium, 5.36 million shares (or a 42.9% stake) are common shares, while the other 801,281 are convertible preference shares.

Bain Capital has held the management rights of Hugel since January 2018 by purchasing 44.4% of the company’s shares at the time -- 42.9% as common shares and 1.5% as treasury shares -- at 927.5 billion won ($794 million).

Hugel’s management decisions after the acquisition will be jointly led by the consortium companies, with GS participating as a board member. Other members of the consortium include Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. as well as private equity firms CBC Group of Singapore and IMM Investment Corp.

Sources say that GS will fund about half the payment for the acquisition, while the other members will be financing the rest. The transaction is expected to close within the next month.

“Hugel, among a long list of bio companies in South Korea, stands out with a proven track record for botox and filler products on the global stage. Hugel will be GS Group’s platform for expanding businesses in the bio segment,” said GS Group Chairman Huh Tae-soo.

Hugel exports botox and dermal filler products to 27 countries worldwide including Japan and Vietnam. Established in 2001, the company has more than a 50% share in South Korea’s botox market.

Hugel last year reported its highest-ever earnings with an operating profit of 78 billion won ($66.8 million) on revenue of 211 billion won ($180.8 million). The botox maker is sustaining strong performance into 2021, posting an operating profit of 26.5 billion won ($22.6 million), up by 59.1% from the same period last year, on revenue of 64.5 billion won ($55.2 million).

Hugel is also the only South Korean botox maker to have entered the Chinese market. Last October, Hugel’s Letybo received the Chinese government’s approval for distribution the country. China’s botox market is expected to grow from 6.5 billion yuan ($1 billion) this year to about 18 billion yuan ($2.8 billion) by 2025.

Analysts say that the acquisition will fast forward GS Group’s shift toward the bio sector. GS for years has been reviewing multiple options to be the group’s future growth engine, as its core businesses including oil and gas are beginning a global downturn. After choosing the bio industry as the group’s next playing field, GS has been active in funding biotech startups both Korea and abroad.

GS Group’s oil and gas unit GS Caltex from the second half of 2019 has also been making 2,3-Butanediol through bio-based manufacturing processes. The 2,3-Butanediol is currently sold in the market as a base material for eco-friendly cosmetics, and will also be used for agricultural and chemical materials.

The analysts highlighted that the acquisition will also accelerate Hugel’s expansion in other Asian countries, especially with the CBC Group as a consortium member. Established in 2014 as C-Bridge Capital, the group is based in Singapore and specializes in investments in biopharmaceutical, medical device and diagnostic technology companies.

Write to Chae-yeon Kim at why29@hankyung.com
Daniel Cho edited this article.