Mandarin backs cosmetic specialist Klapp

Alessia Argentieri
07 May 2020

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Private equity firm Mandarin Capital Partners has acquired a majority stake in German cosmetic company Klapp Group.

Mandarin acquired 80% of the company. The company's founder Gerhard Klapp will retain around 15% and stay on with the business as senior advisory board member, while the management team led by CEO Reiner Engert will hold the remaining 5%.

This is the first deal closed by Mandarin in Germany. The GP deployed capital from Mandarin Capital III, which has raised €175m so far. Including this deal, the fund has deployed around €45m, the GP told Unquote.

The vehicle has a €250m target and a €300m hard-cap and typically invests in companies with EV in the €30-70m range and EBITDA of €3-7m, operating in a wide range of sectors, including mechanical engineering, chemicals, cosmetics and food. It deploys equity tickets of €15-20m and follows up with additional capital injections to finance a buy-and-build strategy up to €30m per portfolio company.

"The sales of the Klapp Group appear to have been hit moderately by Covid-19 due to high geographic and customer diversification, and are currently recovering," Lorenzo Stanca, a partner at Mandarin Capital Partners, told Unquote.

"We plan to boost the company's growth both organically and with new acquisitions by pursuing an intense buy-and-build strategy," he added. "We expect to complete a first add-on in the German cosmetic sector and subsequently additional bolt-ons in the rest of Europe. We also plan to support the company's expansion across the international market, primarily in Asia."

Company
Headquartered in Hessisch Lichtenau, Klapp Group specialises in producing skin care cosmetics.

The company sells 70% of its products under its own brand name Klapp, mostly to professional beauticians. The remainder is sold under private labels to several German and international retailers and supermarket chains, including Aldi, Rossmann and Carrefour. The company's exports account for more than 40% of its sales, with Europe and Asia being the main markets.

Klapp Group employs 200 people and generates EBITDA of €3.2m from revenues of €28.5m. It reports net debt of €7m.

People
Mandarin Capital Partners – Lorenzo Stanca (partner).
Klapp Group – Gerhard Klapp (founder); Reiner Engert (CEO).