L Capital's Asia investments 'strong'

L Capital's Asia investments 'strong'
Posted: 26 April 2011 2119 hrs

SINGAPORE: L Capital said its investments in Asia, through a US$640 million fund, are expected to outpace returns of those in the US and Europe.

The private equity arm of luxury goods conglomerate LVMH Group, or Moët Hennessy - Louis Vuitton, said it will set up a second Asia based fund.

The higher returns comes on the back of the region's booming retail market.

Growth of Asia's middle class means higher disposable income and global luxury conglomerate LVMH is taking note.

With Europe and America facing anaemic growth, private equity players investing in retail are looking for the opportunity they need in Asia.

L Capital Asia is looking for minority investments in regional consumer brands with what it calls value-for-money and aspirational qualities.

In addition, it has an exit strategy timeline for its acquisitions that seek to deliver returns to its shareholders, unlike its famous parent company which acquires luxury companies wholesale.

The fund said its exit strategies for its portfolio of companies include initial public offerings, strategic sales, as well as mergers and acquisition.

L Capital Asia managing partner Ravi Thakran said: "So we are looking at setting up these companies for these great exits.

"There is no private equity platform that brings the value-add platform of our kind; in terms of what we bring, there is almost no competition".

The fund is expected to invest in middle market deals in the food and beverage, beauty, retail and wellness segments and is not worried about being dwarfed by larger private equity giants who have the capacity to invest in tens of billions despite its relatively small fund size of $640 million.

This is because they have an advantage of relying on a large luxury conglomerate for operating expertise.

L Capital said it does not make drastic makeovers to companies in which they hold stakes.

Singapore based retailer Charles and Keith said it is business as usual for them after the fund bought a 20 per cent stake in the company.

Charles & Keith Group chief financial officer Dicky Koh said: "They don't dictate how we do our business, so they come in as a very good value add partner.

"For us, we still go about with our day-to-day business in a normal way, but we do get a lot of feedback and advice from them whenever we need".

L Capital said it will not be collaborating with its parent company LVMH to avoid possible conflicts of interest.

The fund said it will make about US$200 million of acquisitions this year, and will announce one Chinese and one Indian fashion company investment within two months.

Insofar in the region, managing director Ravi Thakran said it has invested about $90 million in two other acquisitions including Sincere Watches and Hong Kong based Emperor Watch and Jewellery.

-CNA/wk

- wong chee tat :)