KKR to acquire Ci FLAVORS, adding to $723B asset base

KKR agreed to acquire Ci FLAVORS, the Japanese beauty platform behind &honey and MOROCCAN BEAUTY, from L Catterton and other shareholders, adding to a firm that manages $723.2 billion in assets.

"Ci FLAVORS has built a differentiated position in Japan's beauty market through its consumer-focused product development capabilities and diversified portfolio of brands," Eiji Yatagawa, partner and head of Japan private equity at KKR, said.

Financial terms were not disclosed. Funds managed by KKR will buy Ci FLAVORS from all existing shareholders, including founder Yusaku Horiuchi, L Catterton, eBeauty Group and Yanagi Capital Partners, under definitive agreements signed Monday. Horiuchi and Chief Executive Officer Yoshiaki Okura will invest alongside KKR.

Ci FLAVORS, founded in 2011, operates brands including &honey, 8 THE THALASSO, unlabel, THERATIS and MOROCCAN BEAUTY across haircare, skincare, body care and lifestyle categories. Its operations span brand sales, OEM manufacturing, direct-to-consumer and e-commerce channels, department store retail and global ingredient procurement. The company holds an established position in Japan's shampoo and hair treatment market and has recorded growth in overseas sales across Asia and North America.

L Catterton, which manages about $40 billion of equity capital, invested in Ci FLAVORS in 2022. Taka Shimizu, a managing partner at L Catterton, said the company achieved its goals through "strategic planning and disciplined execution" and is well positioned for further growth under KKR's ownership.

The acquisition extends KKR's run of consumer and beauty investments, which include Wella Company, the hair care group, beauty-booking platform Fresha, supermarket chain Seiyu, V3 Group and India's Vini Cosmetics. KKR is making the investment through its flagship Asia Pacific private equity strategy. Okura said the firm will help accelerate growth through international and category expansion, strengthening its talent base and strategic M&A.

The deal marks another exit for a private equity backer to a larger fund, a familiar path as global firms compete for Japanese consumer assets with international expansion potential. L Catterton's 2022 investment preceded a period of overseas growth for Ci FLAVORS, whose brands have gained traction in Asia and North America. KKR's last major Japan consumer acquisition was Seiyu, the supermarket chain it took private in 2021.

KKR Stock Trades 19% Below Fair Value

KKR shares closed at $107.32 on Monday, down 1.07 percent. According to GuruFocus, the stock trades about 19.3 percent below its GF Value of $132.99, with a market capitalization of $96.33 billion. KKR's trailing 12-month price-to-earnings ratio of 34.18x sits slightly above its five-year median of 32.12x. Insiders have been net buyers over the past 12 months, purchasing $50.9 million worth of shares with no selling reported.

Japan's beauty market has drawn growing interest from global buyout firms seeking consumer brands with export potential. The Ci FLAVORS acquisition gives KKR a platform with established distribution in Asia and North America as it pushes into international markets. If KKR replicates the Wella playbook of expanding a beauty brand across geographies, Ci FLAVORS could become a template for further Japan consumer deals. The transaction is expected to close pending regulatory approvals.

This article is for informational purposes only and does not constitute investment advice.