Fancl Asia sale could fetch US$1bn for Hong Kong owner

Fancl Asia distributor CMC Holdings is reportedly looking to sell the business in a deal that could be worth as much as US$1 billion.

According to a Reuters report, Hong Kong-based CMC, owned by Chris Chan, has engaged Morgan Stanley to approach private-equity investors and other prospective buyers for the business, which operates more than 200 stores in Greater China and Southeast Asia. The company effectively accounts for the majority of the Japanese cosmetics company’s brick-and-mortar business outside its home market.

Fancl Asia achieved pretax earnings of about US$65 million in 2018 and last year, on turnover of between $250 million and $300 million. Asia represents a significant growth opportunity for cosmetics companies, accounting for 53 percent of the world’s skincare market and is projected to achieve 5 percent annual growth in the coming years.

According to a Reuters source, Fancl Asia will be sold via a two-part auction process, with initial bids scheduled to be received by the end of September.

Morgan Stanley, CMC, Fancl and Chan all declined to comment to Reuters which did not identify its source due to confidentiality reasons.

About 80 percent of the sales by Fancl Asia are in Greater China, where retailing has been seriously affected this year due to Covid-19-related lockdowns.

Sources have confirmed any sale of the business would not affect the distributorship contract with the Japanese skincare specialist brand, which has six years to run in China and 10 in the rest of Asia.