Gobi Partners exit Malaysian beauty e-commerce site Hermo with 91% IRR

• Stake sold after 2 years to listed Japanese design company, istyle
• Initial discussions focused on follow-on investment but acquisition made more sense

VENTURE capital firm Gobi Partners announced yesterday that it has exited portfolio company Hermo to Japanese listed company istyle for an IRR (internal rate of return) of 91%.

Gobi invested in Hermo in October 2015. It was the sole investor for the company’s Series A and provided a total of US$2 million. Gobi subsequently began connecting the founders with experts and professionals in their line of business. Since Gobi’s investment Hermo grew to achieve a 300% year-on-year growth in 2016. As a result of this success, founder Ian Chua was listed on Forbes’ 30 Under 30 Asia feature in 2016. Crystal Horse Investments Pte Ltd and Tan Swee Yeong were the other angel investors in Hermo prior to their Series A.

Commenting on Gobi’s role, Chua said, “At the time, there weren’t a lot of funding options for Malaysian startups, especially those that were based outside the Klang Valley. I made the decision to have my company based in Johor Bahru, and I feel fortunate to have captured their attention. Gobi’s assistance in making our platform an established e-commerce site as well as a household name was tremendously valuable.”

Moving forward, Gobi’s decision to exit Hermo to i-style was driven by the Japanese listed company’s proven track record of creating successful international companies and its strategic positioning for the North Asian market.

“We have been in discussion with istyle for a follow-on investment in Hermo since last year, and as the conversation deepened, it turned out that an acquisition made more sense as it came across as the most effective on achieving our common vision. Hermo’s strong presence in Malaysia was also a major contributing factor,” said Ku Kay-Mok, Partner at Gobi Partners.

“We have been very fortunate to have the support of other fellow investors in making this exit possible. In particular, I would like to mention Tan,” said Ku.

Gobi’s local venture capital partner, Mavcap (Malaysia Venture Capital Management Bhd) was also encouraged and optimistic about the deal, as it showed great potential for other Malaysian companies looking to expand to international markets.

Mavcap CEO Jamaludin Bujang said, “This is Gobi Mavcap’s first exit of the year, and for us, it shows the potential of what can be achieved for Malaysian startups if we continue our work with venture capital firms such as Gobi Partners. Our local companies can go international, if they are as understanding, hardworking and dedicated about providing good service to their customers as the Hermo team is. Deals like this show the world that Malaysian entrepreneurs are ready to take on the challenge of entering global markets,” he said.

Founded by Ian Chua and PS Chong, Hermo claims to be Malaysia’s top beauty e-commerce destination dedicated to helping women beautify themselves through its selection of high-quality beauty products at great prices from renowned international brands, while also offering fashion insights and beauty tips. Hermo partners directly with brand owners and distributors, establishing flagship brand stores on their platform and maximizing benefits for both brands and consumers.

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