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The leading company in natural cosmetics in Spain

CORPFIN CAPITAL, a private equity fund, invests in the equity of Babaria for reinforcing its internationalization plan THE VECTOR COMPANY advised Babaria on this transaction

General Overview

Babaria is a company involved in the cosmetic and personal care sector, positioned as one of the leading brands above the private label (retailer’s brand).

The company distributes its products mainly in the retail channel (supermarkets, hypermarkets,…) and in the Specialty stores channel (perfumeries,….) leveraging its positioning on the natural origin principle.

A family-owned company managed by its owner but with a professional management team with a long experience in the sector.

The company decided at a certain point of time to reduce the private label production (contract manufacturing for white label products) and to focus on its own brand products as well as on growth countries (Latin America) as the European markets were became on a more mature market for these products.

Strategic Rationale

The investment of a private equity fund in the equity of the company together with the recruitment of a new Managing Director with experience in the sector (having worked in multinational companies in the personal care products sector), would help the company in achieving its business plan and the management transition.

Key learnings

The EBITDA recurrence, even in crisis periods, showed a stable generation of operative cash-flows that gave confort to the investor.

A well-maintained productive asset, with efficient production lines designed to handle the complexity of a wide range of products, with a robotic warehouse management system and an exhaustive quality control measures, provided the company’s operation with the maximum guarantees for successing.

One of the main product families was affected by a relevant seasonal component (the sun products line). So different factors needed to be understood and analysed (in terms of current trading, working capital, post-season product returns, etc.)

The importance of assuming the management accounts to control the evolution of the business and to support the due diligence process and the conversations with the private equity team.