What happened
Perfect Diary has closed a new round of investment that is worth $140 million, and US private equity firms Warburg Pincus and the Carlyle Group have each invested around $70 million, sources told Chinese local media All Weather TMT. The new infusion of funds brought up the brand’s valuation to $40 billion.
Born a digital native, the budget-friendly C-beauty brand is barely three years old, but its tactical e-commerce strategies have helped it top the sales chart on Tmall’s Double 11 Shopping Festival many times. Owned by Guangzhou-based Yatsen Global, it has started moving offline in 2019, and currently has more than 100 stores nationwide with plans to reach 600 by 2022.
The company is headed for an IPO in the US at the end of the year, the publication wrote. Perfect Diary did not immediately respond to requests for comment.
Jing Take:#
Although a 1.25 percent minority stake each for Warburg Pincus and Carlyle does not translate to much voting power, exchanging their resources and specialties with large profit from a much expected IPO is still very much worth it.
The Carlyle Group is known to be an aggressive buyout firm that has fueled the global expansion of Italian luxury sneaker brand Golden Goose (which it just sold) with 100 flagship stores within two years, including locations in New York, Beijing, and Tokyo.
However, in a business environment under much political tension, Perfect Diary might rely more on Warburg Pincus’ specialty: advising on policy-related issues both globally and at the federal and state level in the US. To start with, with a potential TikTok ban and the threat to delist all Chinese companies from US exchanges looming, any Chinese firm that’s considering a US IPO has to be on tiptoe. What’s worse, cheap-goods-heaven Miniso, which just filed to the Securities and Exchange Commission last week, has been burned by the news that Shanghai Municipal Drug Administration detected a poisonous chemical in its nail polish product that exceeded the national limit by 1,400 times.
As the US public perception tends to bundle all Chinese firms together, Perfect Diary is facing a rocky road ahead. At this point, a healthy public image (in the US) is more important than any new stores.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.