Global private equity firm TPG has struck one of this year’s standout mid-cap deals in South Korea, selling Samhwa Co., a cosmetics packaging specialist, to leading buyout firm KKR for 800 billion won ($577 million).
The deal, which comes less than two years after TPG acquired Samhwa for about a third of that price, is a rare feat in a sluggish dealmaking climate.
Investment banking industry sources said on Monday that TPG has signed a deal to sell its 100% stake in Samhwa to KKR. This transaction marks one of the largest private equity exits in Korea this year and underscores the growing appeal of “hidden champions” riding the global K-beauty wave.
The deal is a typical picks-and-shovels play in the K-beauty supply chain, as global investors shift focus away from volatile consumer brands to the quietly dominant component manufacturers behind their success.
Analysts said that the sale also highlights TPG’s textbook turnaround strategy in a sluggish Korean buyout market, with the US-based PEF unlocking substantial value through structural reorganization and a sharper product focus.
KKR BEAT BLACKSTONE, CARLYE TO WIN
KKR beat out other global private equity heavyweights, including Blackstone and Carlyle, with an estimated 800 billion won offer for Samhwa, according to people familiar with the matter.
TPG acquired Samhwa and four affiliated entities in January 2023 for around 300 billion won, identifying a unique edge in the company’s high-margin dispensing pump technology – a key but often overlooked component in cosmetic product delivery.
Including dividends and other capital returns, TPG is estimated to have earned close to three times its original investment, implying an internal rate of return (IRR) of about 75%.
Founded in 1977, Samhwa is one of Korea’s three leading cosmetic dispenser and bottle manufacturers, alongside Yonwoo Co. and Pumtech Korea Co.
While most peers derive a bulk of their revenues from domestic players like LG H&H Co. and Amorepacific Corp., nearly 60% of Samhwa’s sales come from global beauty giants such as Estée Lauder, LVMH, La Prairie, and L’Oréal.
Samhwa’s Korean clients include Dr.Jart+, Clio Cosmetics Co. and AHC.
PACKAGING PLAY TURNED INTO A TROPHY ASSET
While Samhwa had long been seen as a commodity “bottle company,” TPG saw a more valuable asset in the firm’s high-margin pump technologies as it developed industry-leading precision in dosage control, sealing and priming –all critical to high-end cosmetic delivery.
“Samhwa was not just another packaging play,” said a Seoul-based banker familiar with the deal. “TPG spotted a specialist with global-caliber tech in a low-profile industry, and turned it into a trophy asset.”
Samhwa is expected to post 62 billion won in EBITDA on sales of 280 billion won this year.
The company’s steady business improvement caught the attention of global PEFs and buyout firms.
Blackstone, which owns Chinese packaging giant Shya Hsin, and Carlyle, parent to China’s HCP Packaging, both saw strategic value in combining Samhwa’s dispensing technologies with their existing portfolio.
In contrast, KKR, without an existing packaging platform, spent over a year courting Samhwa and emerged as the most aggressive bidder in the final stretch, according to sources.
SCOTT YOON: HIDDEN CHAMPION HUNTER
Samhwa was long perceived as a traditional plastics manufacturer – even among its own employees, who colloquially referred to it as a “bottle house.”
At the time of TPG’s acquisition, the company’s EBITDA hovered around the mid-50 billon won mark, and it was valued at barely 300 billion won.
But for Scott (ShinWon) Yoon, a partner at TPG who led the deal from origination to exit, the real prize lay in the company’s high-spec pump technology.
“Pumps aren’t just components attached to bottles,” said a person familiar with TPG’s internal pitch. “Yoon’s vision was to flip the model – make bottles secondary to pumps.”
Under TPG, Samhwa shifted its business mix decisively: dispensers now account for 65% of sales, while commodity bottles were pared back.
The company also launched an online custom-order platform tailored to indie beauty brands, allowing real-time design and procurement – something akin to a foundry model in semiconductors.
Yoon, who joined TPG in late 2016 from Morgan Stanley PE, where he worked on deals including Monsalisa Co., Ssangyong C&B, Hanwha L&C and Innocean Worldwide Inc., has made a name for himself as a “hidden champion” hunter.
He was also a key architect behind TPG’s earlier investment in Kakao Mobility, Noxflor and other mid-sized industrial players.
A TEXTBOOK MID-CAP TRANSFORMATION
Yoon spent over two years wooing Samhwa’s elderly founder, Cho Hwee-chul, who was grappling with succession concerns.
The deal was sealed with a commitment to consolidate Samhwa’s fragmented ownership and streamline its governance, transforming it from a family-run web of affiliates into a professional corporate structure, sources said.
Post-acquisition, TPG quickly moved to integrate five related entities under a single holding company and improved its accounting rules.
TPG also installed a new professional management team, bringing in Kim Jun-bae, who previously worked at LG H&H and Cosmax Inc., as Samhwa CEO. Executives from Hanon Systems Co. and LG Group were hired to bolster Samhwa’s operations and global sales.
For KKR, the acquisition is both a growth bet on a niche industrial champion and a nod to the enduring value of behind-the-scenes innovation, analysts said.
By Jun-Ho Cha
chacha@hankyung.com
In-Soo Nam edited this article.
