LVMH to invest $650 million in Asian companies

International private equity fund L Capital, backed by LVMH Group, has just launched its  fourth private equity fund worth $640 million for investments in sectors like consumer brands, lifestyle retail, media and entertainment in China, India,

Southeast Asia and the Middle East.

L Capital Asia is LVMH’s $650 million equity fund that was launched last year to invest in the region’s emerging economies. The fund plans to invest 80% of its capital in India and China. It has studied 108 consumer companies in the Asia.

The private equity fund aims to invest in local companies which have innovative brands and concepts which suit the taste and needs of consumers in Asian markets. ‘Today, while there is an abundance of capital to fund companies, there is a great need for sector specific value added ‘smart’ capital that can drive growth in India,’ said Ravi Thakran, managing partner of L Capital Asia.

L Capital, present in New York, Madrid, Milan, Shanghai and Singapore, will therefore invest in India, China, Malaysia, Indonesia and Thailand. Thakran said while LVMH focuses on the high-end segment, L Capital Asia invests in both aspirational and luxury brands. "In China, there are already at least 10 businesses we might be interested in which are worth $200 million to $250 million, whereas in India none of the (best known) designers have even reached the $100 million scale."
 
According to the parent company, the fund still has about $560 million to invest by 2014, about 80% of which will be Indian and Chinese companies. It has studied 108 consumer companies in China, India and south-east Asia as potential investment targets. Thakran said the fund aimed for a five-time return from the investment, which it plans to hold for four to five years.

"We are looking at investing in companies in the lifestyle arena in Asia, primarily from the aspirational segment, meaning people who are moving from mass-produced goods to the next layer up," said Thakran. "We are not keen on top-end luxury in India. We may look at that, but that is not our main focus."

In the same vein, L Capital Asia confirmed last week that it is in exclusive talks to buy a stake in India's biggest jewellery retailer Gitanjali Group. "The talks with Gitanjali Capital are at an advanced stage. We are doing the due diligence," assured Ravi Thakran. This investment would rise up to about $100 million (about Rs 450 crore). "We are looking at their branded business," Thakran told Hindustan Times.

The managing partner of L Capital Asia also said the fund was also in "advance stages of discussion" with an Indian fashion company. "The investment will be about $40 million (about Rs 180 crore)," he said without divulging the name of the company as he was bound a non-disclosure agreement.