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MidOcean Partners Invests in BH Cosmetics

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The brand sells value-priced cosmetics and brush sets.

The eye-shadow palette from BH Cosmetics and Lindy Tsang, aka Bubzbeauty. BH Cosmetics has inked a deal with private equity firm MidOcean Partners.

BH, headquartered in Los Angeles, makes value-priced makeup, brushes and related accessories. The brand’s product lineup includes eye-shadow palettes, including the 28-shade Foil Eyes Palette, $13.99, and the First Edition 120-color Eyeshadow Palette, $17.99, as well as facial makeup, lip products, brow palettes and a Studio Pro line. The brand’s products are sold primarily online, but are also carried at Ulta Beauty, Urban Outfitters, Riley Rose and other retailers.

WWD previously reported BH had hired The Sage Group to consider a transaction — the firm was exclusive financial adviser to BH. Industry sources indicated the brand has between $50 million and $60 million in net sales, is very profitable and does most of its sales online. The MidOcean deal will give BH the ability to expand in the U.S., globally and tackle new wholesale opportunities.

BH has a history of partnering with influencers, including Carli Bybel, who has 5.7 million YouTube subscribers, and BubzBeauty, who has 2.9 million YouTube subscribers, on products. BH has also partnered with actress Ashley Tisdale for several palettes. 

That strategy seems to have boosted the brand’s earned media value, according to data from Tribe Dynamics. BH’s EMV was up 66 percent year-over-year for the third quarter of 2017. BH has also grown its community with a 278 percent increase in ambassadors, and grew its posts by 448 percent, according to Tribe.

Under MidOcean, BH will continue to be led by founders Fred Sadovskiy, chief executive officer; Kirill Trachtenberg, chief strategy officer, and Robert Sefardi, chief operating officer. All three will retain stakes in the business.

“BH was launched in 2009 with a focus on eye palettes and has since developed a full suite of cosmetics with high quality products at value price points,” said Trachtenberg. “The partnership with MidOcean will enable us to dedicate additional resources to key areas of our business including innovation and product development, marketing and branding and customer service. We believe there is a tremendous opportunity to accelerate BH’s growth.”

“We believe that BH Cosmetics has substantial opportunities for continued growth and expansion fueled by appropriate investments in people, infrastructure and marketing,” said Jonathan Marlow, managing director at MidOcean. “We see numerous opportunities to increase BH’s presence across channels and geographies.” MidOcean’s beauty investment history also includes Image Skin Care, which it is currently invested in, and Agilex Fragrances, which it sold to Firmenich in 2017.

Beauty M&A has remained active through the new year. In December, Korres received a 50 million euro investment from a Morgan Stanley-managed private equity fund and a Chinese cosmetics distributor; Kao acquired Oribe; Colgate purchased EltaMD, and PCA Skin and TSG Consumer invested in HudaBeauty.