Samara Capital preps full exit from ESME Consumer, appoints banker
Samara Capital plans to sell its 100% holding in personal care company ESME Consumer, with Jefferies facilitating the process. Valuation expected is in the $175-225 million range. A public listing may be considered if the sale plans fail. ESME reported an Ebitda loss as revenues declined in FY24.
Mumbai: Samara Capital, an India-focused mid-tier private equity firm, has initiated plans to exit ESME Consumer, a personal care and beauty products company it owns wholly, two persons familiar with the matter said.
The company has appointed investment bank Jefferies to facilitate the complete exit and the deal was launched a few weeks back, the first person said.
The deal may be in $175-225 million valuation range, the second person said, with both strategic and financial buyer to be approached. Both persons wanted their names not taken in this report.
IPO Backup
If the private sale does not materialize at a suitable valuation, Samara may also consider a public listing for the asset, the second person added.
Jefferies declined to comment while Samara Capital and ESME Consumer did not respond to Mint’s requests for a comment on Thursday.
Samara created ESME after buying majority stakes in two New Delhi-based personal care companies Blue Heaven Cosmetics and Nature’s Essence in 2019, with the aim of building a mass-market personal care business of scale with shared costs. Blue Heaven, the larger of the two brands, sells a range of coloured cosmetics such as mascara, lip colour, foundation sticks, compact powders; Nature’s Essence is smaller catering to salons.
ESME sells through over 30,000 distribution channels and Samara takes the major functional and strategic decisions for the combined entity.
In FY24, ESME reported a consolidated revenue of ₹324.6 crore from ₹375.4 crore a year earlier, according to India Ratings.
ESME's Ebitda margins also fell to 4.36% from 10.84% in FY23. An India Ratings report from last year highlighted that the decline in revenue was due to the management's decision to pull back products supplied in the pandemic period, leading to a pile-up over after expiry. This also resulted in the Ebitda loss at the entities in FY24.
Ebidta, short for earnings before interest, depreciation, tax, and amortisation, represents the cash profits left behind with the company. Ebitda adds restructuring costs to this figure.
India Ratings in its report expected the topline of ESME, which mostly sells in tier I and II cities in north and east India, to recover in FY25. Its revenue for the first five months of FY25 stood at ₹166.5 crore, the latest period for which company financials are available.
Growth market
India’s beauty and personal care market has sharply grown in recent years, propelled by growing consumer awareness and wider availability of products. E-commerce and quick commerce avenues coupled with an omnichannel strategy have further fueled demand for such products. Last year, consultancy firm Redseer estimated that India’s beauty and personal care market that stood at $21 billion in 2024 is projected to reach $34 billion over the next three years,.
The beauty and personal care category is seeing a lot of growth thanks to increasing demand from smaller Indian cities owing to rising disposable incomes, social media influence and e-commerce, Natasha Treasurywala, partner at law firm Desai & Diwanji. "Multinational companies are also always on the lookout for good strategic opportunities in India," she said.
Sumeet Narang-led Samara, which is in the process of closing its third fund, has had healthy returns from its previous funds. Its second fund that exited most of its investments clocked a 3.5x gross multiple on invested capital, with a 25% internal rate of return, Mint reported earlier this year.
Some of Samara's prominent exits from the second fund include the sale of Spoton Logistics to Delhivery; a stake sale in AIG Hospital to Quadria Capital; sale of Lotus Surgicals to Tube Investments and Premji Invest; and the sale of stake in Oaknet Healthcare to Eris Lifesciences.
It also offloaded stakes in medical devices firm Sahajanand Medical Technologies Ltd, staffing firm First Meridian Business Services Pvt. Ltd and biryani restaurant Paradise Food Court through a $150 million continuation fund led by TR Capital in 2023.
To date, Samara has deployed about ₹10,000 crore across all its funds. The India-focused private equity firm typically invests in mid-market companies poised for growth, focusing on consumer, retail, healthcare, pharma, financial services, business services, and technology sectors. Across its three funds, the firm has made over 25 acquisitions for its portfolio companies, including roll-ups.
A roll-up involves acquiring and merging smaller companies in the same sector to create a larger consolidated entity. Bain Capital and Carlyle, too, have used this strategy to consolidate their acquisitions in auto components and pharmaceuticals.
Over the years, Samara has seen its average ticket size increase from ₹300-700 crore, including co-investments in the second fund, to the ₹500 crore to ₹1,500 crore range in the third fund.
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