Baltic Cosmetic Holding will be the first pan-Baltic holding in cosmetics retail and beauty services. The transaction, with a value of €5 million combines equity finance from the East Capital Amber Fund and co-investors.
The East Capital Amber Fund, part of Sweden-based East Capital's private equity fund, has set up Baltic Cosmetic Holding to hold stakes in Kolonna, Latvia's largest chain of beauty salons, hairdressers, cosmetic retailers and fitness centres; as well as in Sarma,Lithuania's market leader in cosmetics retail. Kolonna has also invested in Russia through Kolonna Russia.
The company, which manages a total of €600 million worth of equity stakes in eastern European businesses, says that it is aiming to leverage the market dominance of Kolonna and Sarma in the Baltics, to add value by developing additional services and to further expand onto the Russian market.
"Strong economic growth in the Baltic States and inRussia is bringing about an increased consumption rate and leading to double-digit annual growth on the market for cosmetics and beauty services," said Kestutis Sasnauskas, managing director of East Capital Private Equity. " Growth is further fuelled by the catching-up of consumption per capita. In the US or in France, the annual per capita spending on cosmetics and toiletries is around €160, in Russia it is still less than €40."
The project has been structured with equity finance from the East Capital Amber Fundand co-investors, as well as additional debt facilities having been arranged.
"The investment is to secure its market position and will also boost existing development plans. Key to this growth strategy is the group's goal to expand into Russia," added Sasnauskas.
The new holding plans an investment programme, which may include the acquisition of additional companies in the sector as well as the forming of new partnerships.