Westhook Capital bets over $30m on a skincare business

RainShadow Labs is the third platform investment out of Westhook’s debut fund.

Westhook Capital, a Los-Angeles private equity firm, recently poured north of $30 million into a natural personal care product manufacturer, sources told PE Hub. 

Announced last week, the lower mid-market firm bought a majority stake in RainShadow Labs on Oct. 31, investing out of its $140 million debut fund that closed late 2018. TCF Capital Funding provided debt financing on the acquisition.

The co-founders, Vanessa and Tim Johansson, will retain about a quarter of the business, according to Portland Business Journal.

“The owners wanted to stay involved but were also looking for some realization on their business,” said Michael Hooks, managing partner at Westhook, chatting from an out-of-town location in Denver.

Founded in 1983, RainShadow has grown to become one of the largest companies based out of St. Helens, Oregon. It designs, creates and distributes organic skincare products for entrepreneurs. “If you have an idea but need help realizing it, RainShadow would build formulations to your specifications,” Hooks said.

This is the first institutional capital for the skincare platform, which received a PPP loan of less than $1 million from Cross River Bank this May, according to ProPublica. Meriwether Group, sell-side advisor to RainShadow, introduced Westhook to the company in the same month.

“[A] number of meetings were by phone or Zoom,” Hooks said. “Then we met in person mid-summer; I believe you still have to meet face-to-face even if it’s much less than normal.” The parties signed an LOI in August without the involvement of a buyside advisor.

On the covid-impact, Hooks said, the “bulk of the business goes through a direct-to-consumer channel and hence, remained strong.”

Looking ahead, the private equity firm affirmed that there will be additional investments into the platform come 2021, with the recent capital infusion used to expand and modernize RainShadow’s facilities.

This is Westhook’s first foray into skincare. Previously, the firm invested in two landscaping service companies – Metco Landscape and Santa Rita Landscape – and also closed an add-on for the former last year.