This article was published on May 8, 2025, at 3:46 p.m. on the ChosunBiz MoneyMove site.
Domestic private equity fund operator Affirma Capital is moving to sell the management rights of the color cosmetics original design manufacturer (ODM) Hwasung Cosmetics. This decision is believed to be based on the analysis that, following a record high performance after the COVID-19 pandemic, it is a timely opportunity to recover funds as the domestic beauty ODM industry is rapidly growing.
On the 8th, according to the investment banking (IB) industry, Affirma Capital is in the process of reviewing the sale of management rights equity in Hwasung Cosmetics. Affirma Capital plans to choose a new manager as the contract period with Samsung Securities, which was initially designated as the sales lead, has ended. The subject of the sale is the 70% equity stake in Hwasung Cosmetics held by the special purpose company (SPC) Aterion Holdings.
Founded in 1994, Hwasung Cosmetics is one of the leading color cosmetics specialized ODM companies in the global market. Affirma Capital acquired a 70% equity stake in Hwasung Cosmetics in June 2019. After establishing its subsidiary A&P in 2013, Hwasung Cosmetics strengthened its competitiveness by internalizing the production of cosmetic containers.
In July 2022, Affirma Capital acquired the KONEX-listed company NOWCOS in a bolt-on manner. Unlike Hwasung Cosmetics, NOWCOS specializes in basic cosmetics as an ODM company. Affirma Capital consolidated the entire value chain of cosmetics production from ‘ingredients – production (OEM/ODM) – packaging’ through this acquisition.
Hwasung Cosmetics has continued to experience rapid growth in performance since the COVID-19 pandemic. Sales and operating profit surged from 71.3 billion won and 9.6 billion won in 2023 to 91.4 billion won and 16.2 billion won last year. Compared to the year of acquisition in 2019, both sales and operating profit have roughly doubled. Last year’s earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeded 20 billion won.
The industry expects Hwasung Cosmetics to achieve record performance again this year. After acquiring Hwasung Cosmetics, Affirma Capital implemented an expansion strategy centered on overseas cosmetic brands. The number of clients, which was only 100 before the acquisition, increased to 130 in two years. Currently, 70% of Hwasung Cosmetics’s clients are overseas cosmetic brands.
Recently, the number of client companies for domestic cosmetic ODM firms, including Kolmar Korea and COSMAX, has surpassed 10,000, indicating rapid industry growth. In fact, not only major domestic beauty companies such as Amorepacific Corporation and LG H&H but also global beauty companies like L’Oréal, Johnson & Johnson, and L’Occitane, as well as small indie brands from Southeast Asia, the Middle East, Africa, and South America, are contracting Korean ODM companies to produce their products.
Initially, Affirma Capital halted the sale of Hwasung Cosmetics last year after starting the process. They extended the maturity through acquisition financing refinancing to secure time, and as the cosmetic market showed signs of recovery, they decided to wait for the annual performance. Previously, Affirma Capital successfully extended the loan maturity, which was scheduled to expire in June, by securing 70 billion won in refinancing and recapitalization in mid-last year.
An industry insider noted, “Given that Hwasung Cosmetics achieved its highest ever performance and underwent refinancing last year, it seems to be a good time to prepare for a sale,” and added, “It appears that they are set to actively pursue an exit this year.”