WaterWipes were born of necessity, and the skin-friendly product has rapidly become a must-have for new parents. Jason Sinclair reports on the brand’s origins and the impact a recent €145m investment from 3i will make to its future.
After Edward McCloskey’s daughter was born in 2006, his shopping basket, like that of many new parents, began to fill up with previously unfamiliar products. His new baby had sensitive skin and soon began to develop severe nappy rash. McCloskey began to study everything that came into contact with her skin, including baby wipes.
Shocked to realise how many chemicals went into making the wipes, McCloskey decided to try chemical-free wipes – but couldn’t find any. Fortunately, he was in a position to research and manufacture his own solution. As the CEO of family business Boyne Valley Group and founder of Irish Breeze – which manufactured cotton wool, soaps and other skincare products – the Drogheda entrepreneur had a team of scientists and custom-built machinery purposed to develop new technology for baby wipes. It may also have helped that, with cotton prices spiking, the company knew that it needed to find a game-changing product to help its fortunes.
And so WaterWipes was born. Now, as the product, and McCloskey’s daughter, turn 18, private equity group 3i has invested €145m (£120m) for a majority shareholding in WaterWipes. McCloskey is retaining a significant minority position, with the leadership team led by Paul Heeringa, CEO, re-investing and partnering with 3i.
WaterWipes span out of Irish Breeze 12 years ago, Heeringa explains, but “as 100% shareholder and aged 62, he was in a position where you want to rebalance the priorities in your life, although he had no need to sell”. Heeringa then describes a “process with four interested parties, one of whom was 3i”.
Irish and global
Headquartered in Drogheda, Ireland, WaterWipes was founded by businessman Edward McCloskey. Its first products came to market in 2008 and it entered the US market in 2013.
The company’s production processes are completed in-house with sales in more than 50 countries worldwide. 3i will support the company’s expansion in Europe, Latin America and Asia in its core baby and children’s ranges, as well as looking for further opportunities in additional categories such as adult and convenience.
“More than half of the business is in the US,” says 3i’s Rupert Howard, “where there’s obviously a massive market, so there’s huge potential still to go forward there. It’s already an international business and everyone has babies, everyone uses wipes, whether for babies or for other use cases. So there is a genuinely global opportunity.”
Brand awareness
Rupert Howard of 3i remembers looking at the company in 2021 “both as 3i and through one of our portfolio companies at the time, Havea. At that point, for various reasons, it didn’t make sense for 3i and Havea was preparing for an exit.”
But Howard says the company stayed “on the radar”, and “I was a customer of the business when my children were small, so have always been very aware of the brand and the product quality. Fast forward to spring last year and we had some discussions with Paul Heeringa (CEO who 3i had known institutionally for a long time) and Rothschild, who were advising on the sell side. The transaction had changed materially for Edward, as previously he was looking for a full exit, but this time, he was looking for more of a partnership and rolling over a material minority stake alongside the new partner.”
Agreeing the terms of deal was “relatively simple”, Howard says but, given it was a primary deal, the structuring took “a relatively long time”. That meant it took a while to go from “the original conversations in May to the summer when things started really hotting up. We moved into exclusivity in October time, and then got it done just before Christmas.”
In choosing 3i’s deal, Heeringa says the partners looked for “a combination of the party in itself, the reputation, the valuation of the business, but also the way they are aligned with our long-term strategic thinking and our mission. And to be honest, 3i has a track record that is very impressive, with similar-sized companies to us, and in the talks we had they really aligned with our strategic thinking. We are aligned on the long-term strategic goals. We are aligned on the key levers to drive further growth.”
“I wouldn’t say there’s meaningful synergy with existing companies in the portfolio,” says Howard. “However, it’s very similar to our investment in MPM, which is a premium pet food business that I look after, where it’s differentiated by being a branded clean-label, minimal-ingredient product sold at a premium price point through specialists, and it’s growing aggressively into the US. You can almost lift that quote and apply it to WaterWipes.”
Growth plans
Some of the investment’s anticipated growth will be geographic and some will be driven by new products. “Adult wipes are a huge market and it’s growing incredibly fast. When you’re older, your skin is much more fragile. Like a baby’s, it’s not as resilient, so you need a product that is not going to have lots of alcohol in it, or chemicals that are going to dry out your skin or cause cracking and irritation. There’s a real role to play for our products at that end of the market and then, clearly, there’s a period between newborn, baby, toddler, young child travel, all of which are pretty established use cases. But at the moment, the business is much more focused on that newborn and baby stage.”
Geographic spread is another potential growth area – as Howard says: “Almost everybody has babies.” Manufacturing is based in Ireland, where Heeringa points to the control the company can have over the product and the quality of the water (“We pump our own water from our own well,” he says). Howard states that “there’s plenty of capacity. We’re very pleased with the quality of the site and the enthusiasm of the employees. But over time, as the business scales and the US becomes more important, then more from a sustainability perspective than anything else, we can evaluate whether it would make sense for more manufacturing in the US.”
Clever tech
“The technology that they have that allows them to get to 99.9% water is really clever,” says Howard, “and the fact that nobody else does it, or can do it (despite trying), gives you confidence they’re doing something genuinely differentiated in the industry. The high water and low chemical content means disposing of WaterWipes is more environmentally friendly than traditional wet wipes, too.”
The fact that nobody else can do it (despite trying), gives you confidence they’re doing something genuinely differentiated
Heeringa also points out that 3i asked the “intellectual property” question before investment, but “big companies like Procter & Gamble and Kimberly-Clark, and probably even mid-sized, smaller companies, I’m pretty sure they have tried hard in the past 10 years to copy our technology and product performance. They haven’t succeeded in the past 10 years, so why would that certainly happen in the coming 10 years?”
That answer was enough to secure the deal, along with a “business plan we have agreed with 3i based on organic growth. Now, if we see opportunities along the way of businesses that would seamlessly fit our strategy, and then would accelerate our execution, why not? We are open for M&A, but that has not been built into the business plan.”
“You may expect tailored products,” Heeringa says, “also very new products for different user needs and different life stages. I can’t reveal too much because I think the competition will also read your magazine, but we have a lot of excitement in terms of innovation in the pipeline.”
