SINGAPORE (BLOOMBERG) - ChinWook Lee quit a career working for an architecture company in South Korea to start his own business, aiming - of all things - to revolutionize the cosmetics industry.
Lee teamed up with dermatologists to create a BB cream, a hybrid of skincare and makeup that moisturizes the skin while evening it out at the same time. He launched the Dr. Jart+ brand in 2005, a year after founding his company, Have & Be Co. It went on to become a major global success story in this new market segment.
So much so that Estee Lauder, the skincare and cosmetics powerhouse, announced last month it would buy Have & Be in its first acquisition of an Asian beauty brand. The deal, which is expected to be completed this month, makes Lee a billionaire.
"I wanted to do global business for a change," Lee, 43, said in an interview earlier this year. Cosmetics seemed a good option, because they're "in line with women's desires regardless of age or nationality."
Lee is the latest billionaire minted from the popularity of Korean beauty products, known as K-beauty. In October 2018, Goldman Sachs Group bought a minority stake in GP Club Co, best-known for its face masks, for US$67 million in a deal that valued the company at US$1.3 billion, turning founder Kim Jung-woong into a billionaire. Firms including Unilever NV and L'Oreal SA have also snapped up stakes in Korean cosmetics companies, bringing multimillion dollar fortunes to their founders.
The Dr. Jart+ lineup includes cosmetics produced in consultation with dermatologists, including moisturizers, cleansers and serums. Have & Be also owns the men's grooming brand Do The Right Thing.
Estee Lauder said on Nov 18 it would buy the two-thirds of Have & Be that it didn't already own for about US$1.1 billion (S$1.49 billion). The cosmetics firm first purchased a stake in the company at the end of 2015.
The two deals have helped Lee, who originally owned all the shares of Have & Be, to amass a fortune worth US$1 billion, according to the Bloomberg Billionaires Index.
Lee, who majored in architecture, declined to disclose how much he received from the 2015 stake sale, but Bloomberg estimates he got about US$103 million. That's based on the company's value at the time, calculated by using the 2015 financial statements and a comparison with five publicly traded peers.
Have & Be declined to make Lee available for an interview because the most recent deal has yet to close. A Have & Be representative declined to comment on his net worth.
In an interview with Bloomberg in January, Lee said cosmetics are an area where people with expertise can beat larger companies with more financial firepower.
"Cosmetics are an area for specialists," he said. "It's not the kind of business where you can do well by just putting in a lot of money."
Lee got the business idea after visiting a dermatology clinic for treatment of a facial issue. He saw how popular BB cream was becoming and wanted to make it available to a wider audience, since at the time it was only available at clinics and pharmacies.
Dr. Jart+ introduced its BB creams at the Sephora chain of cosmetics stores in the US in 2011, which immediately became a hit and prompted other global brands to produce similar versions.
Now Dr Jart+ products are available in more than 35 countries, with China making up its largest market outside South Korea. It sold goods worth 17.7 billion won (S$20.2 million) during this year's Singles' Day shopping day in China - an almost fourfold increase from a year earlier. That, according to one analyst, explains why Estee Lauder was keen to acquire the company.
"The acquisition was mainly to target the China market," said Young-hyun Jun, who covers cosmetics at SK Securities in Seoul. "Estee Lauder probably thought it's more strategic to target the China market with an already established brand."
Estee Lauder acquired Have & Be because of its "focus on creating high-quality skin care products that fuse dermatological science, incredible innovation capabilities and artistic expression," the company said in a statement announcing the acquisition.
The Korean firm's revenue rose about 175 per cent to 237.2 billion won in 2016 after Estee Lauder's initial investment. Sales reached 469.1 billion won last year, according to Have & Be's annual report.