Private credit firm exposed after cosmetics retailer plunges into administration
A private credit firm has been forced to write down the value of one of its portfolio companies after online retailer Give Me Cosmetics was placed into administration.
London-based Beechbrook capital, which offers finance to lower mid-market British businesses, had lent around £6.5m to fund the acquisition of Give Me Cosmetics in April 2024, in a move which Beechbrook said “underscores our confidence in [the firm’s] business model and growth potential within the rapidly evolving beauty industry.”
But less than two years later, the £20m-a-year e-commerce brand’s parent was placed into administration in March after suffering multi-million pound losses.
The beauty business is now being run by founder Dan Fletcher, who has returned to the helm of the firm, with Beechbrook becoming a major shareholder in a rescue takeover.
Give Me Cosmetics did not respond to a request for comment. A spokesperson for Beechbrook said: “Give Me Cosmetics continues to trade normally, and the trading company has remained solvent and outside of the administration process.
“A solvent share sale was completed in March to existing funder, Beechbrook Capital and Give Me Cosmetics founder, Dan Fletcher, who is running day-to-day operations as chief executive.
“Both parties are committed to providing further funding to support working capital requirements that underpins the future business plan.” The company did not respond on the valuation change.
Private credit jitters
The firm’s insolvency offers a rare glimpse into the challenges facing the private credit market as it wrestles with a downturn in investor sentiment and portfolio companies face soaring costs and sluggish demand.
Some of the world’s biggest private credit firms have been forced to limit redemptions as investors rushed to withdraw funds amid growing anxieties over the health of the market.
Last week, investors in Blue Owl’s multi-billion dollar private credit fund asked to withdraw around a fifth of their money in another dramatic escalation of jitters across Wall Street and the financial ecosystem.
The asset manager’s flagship $36bn fund saw redemption requests hit 21.9 per cent of outstanding shares in the first quarter, while its tech-focused fund was hammered by requests for 40.7 per cent. The requests amount to a staggering $5.3bn.
In response to the attempted exodus, Blue Owl launched a cap to limit redemptions at just five per cent for both funds. The cap effectively locks fleeing investors in, in a bid to prevent a liquidity crunch and stop a mass sell-off from depleting the funds’ capital.
“We continue to observe a meaningful disconnect between the public dialogue on private credit and the underlying trends in our portfolio,” Blue Owl said in the shareholder letters.
An earlier version of this story suggested Beechbrook’s loan had been written off. This has since been removed.