True Beauty Capital, which set up shop in early March amid the pandemic, has gotten off the ground through a partnership with North Castle Partners.
The firm, launched by one of the beauty industry’s earliest investors, Richard Gersten, aims to make investments in the beauty and personal care arena – sectors he has worked in exclusively for the past six years.
Gersten formed True Beauty so as to no longer be restricted by investing mandates. “If I were a partner in another fund, I would be restricted from pursuing smaller investments that fall outside of that fund’s mandate,” he said.
Setting the PE firm in motion, True Beauty in partnership with North Castle will invest in beauty and personal care businesses that require capital in excess of $10 million – a minimum investment mandate placed by North Castle LPs.
In the new partnership, Gersten will source investment opportunities and provide advisory services, leveraging the extensive network he’s been building since 1993 – a track record Chip Baird, founder of North Castle, believes positions them well.
While True Beauty may raise a small-cap fund in the future to pursue smaller investments outside of this partnership, at the moment Gersten has no plans to raise a dedicated pool of capital.
“North Castle recently raised a fund and they have a lot of capital available,” he said. North Castle closed NCP VII in April 2019, collecting $418.45 million.
Gersten left Tengram Capital Partners last month to launch his firm but remains devoted to certain portfolio Tengram companies – Algenist, Cos Bar, Lime Crime and Revive – maintaining his role as a board member.
True Beauty has no digital footprint by way of a website and Gersten attributes its pace of progress to ill-timing.
“Because of coronavirus, the vast majority of time has been spent with the portfolio companies. So, timing for me in this respect hasn’t been good,” he said, adding that the online site is in the works.
The partnering of the two firms has been more of a comeback for Gersten, who was a managing director at North Castle from 1999 to 2007.
“I realized that I have this 20-year relationship with North Castle and I was comfortable with them,” Gersten said.
Talking investment opportunities amid coronavirus, Gersten added: “It’s very hard to invest when you don’t know about Q3 or Q4.”
Still, Gersten believes “opportunities are presenting [themselves] right now – companies need money given the circumstances,” he said. “And companies that have strong presence in e-commerce – they are benefiting and doing better.”
Gersten is more inclined to invest in businesses with omni-channel distribution strategies and has a preference for specialty stores (ie, Sephora/ULTA) over department stores when it comes to brick-and-mortar offerings.
Both the PE firms agree that the partnership is long term, and while they are going to be active in the market, the plan is to be conservative in the short term.
Action Item: Check out North Castle’s press release for more info