JH, Berkshire in ‘beautiful’ recap

JH Partners and Berkshire Partners have executed their second dividend recap of MD Beauty, returning roughly 245 percent of the capital invested back to their limited partners.

MD Beauty, a portfolio company of San Francisco-based JH Partners and Boston-based Berkshire Partners, has completed its second dividend recapitalisation in the past eight months, which combined have returned roughly 245 percent of the capital invested back to the firms’ investors.

John Hansen, president, JH Partners

MD Beauty is a San Francisco-based marketer of cosmetics and skin care products. The company also owns 19 boutique stores.

The latest recapitalisation, which closed earlier this month, was valued at $408 million and returned 145 percent in profits back to its investors. The previous dividend recap, a $240 million transaction, came in February and returned approximately 100 percent of the group’s equity from a 2004 investment.

For JH Partners, this investment goes all the way back to the early Nineties. John Hansen, president of JH, was part of a group that acquired Bare Escentuals in 1990. Hansen was just 31 years old at the time of the first deal.

When Hansen joined JH Partners (formerly JesseHansen & Co.), he brought the investment with him into the firm’s portfolio. Almost a decade later, in a separate transaction, JH acquired MD Formulations out of Allergan in August 1999, and two years after that, JH merged the businesses in a roughly $50 million transaction.

Hansen brought on Leslie Blodgett to run Bare Escentuals in 1994, who also took on the role of spokeswoman and became a regular face on the QVC home-shopping circuit. The company has expanded its distribution channels since then and its products can now be found in its own retail locations, other retailers such as Sephora and through infomercials.

Last year JH brought Berkshire Partners into the investment through a recapitalization in which a number of former investors cashed out. After the transaction, the pair each controlled a 50 percent stake in the business. The investors’ stake remains unchanged following the latest dividend recap.

BNP Paribas provided senior debt financing to the recapitalisation.