LVMH’s L Capital fund ready to invest 200 to 300 million dollars in 2012
Established in 2001, the investment fund of LVMH Group (world’s largest luxury group) L Capital has invested in over 25 companies, announcing a total of investment of over 1,5 billion euros made during the past 18 months. In 2012, L Capital could invest up to US$ 300 million. Since 2 years ago, L Capital Asia was launched with a focus on the region, especially India and China. L Capital Asia has recently finalized minority investments in 2 Chinese ready to wear companies. Daniel Piette, CEO of L Capital has recently spoken exclusively to FashionMag about the criteria of investments. Piette indicated middle sized companies specialized in high end clothing companies as the ideal target. Apart from high end clothing, L Capital is also considering fragrances, cosmetics, selective retailing, gourmet, yacts and hotels. While China and India are the top priority countries of investment, L Capital has been working on projects Malaysia,South Korea, Indonesia, Thailand, Singapore and Taiwan.
L Capital Asia has already invested US$ 638 millions in Sincere Watch & Jewelry, Culina, Emperor Watch and Jewellery, Charles & Keith, Ming Fung, and Genesis Colours, Indian luxury retailer. L Capital has recently taken a minority share of Chinese ready to wear company Xinhe, which includes 5 brands as well the Ochirly ready to wear company. Piette confirmed the investments in the two companies have been motivated by their exceptional business performance and rapid expansion of their retail network.
Investing in stakes between 5% and 20%, L Capital Asia is looking to aid these companies develop over the following 3 to 6 years, when an exit would be made. Apart from the financial participation, L Capital is actively involved in strategic business analysis matters at the respective companies, with the aim of further developing their marketing positioning, online sales and distribution locally, but also abroad L Capital is also providing support with logistics and technology systems.
Asked by FashionMag whether on exit, these companies will be prepared to enter the LVMH Group, Piette provided a firm negative response, adding ‘’These brands are not at the luxury level of LVMH, but rather we designate them as “AAA” pour Affordable, Aspirational et Alternative. These would be accesible luxury brands, which could provide an alternative to luxury brands.
As for the financial objectives on exit, L Capital is looking for companies which can achieve an average sales growth of 30%. From the total of 1,2 billion euros, L Capital retains 600 millions euros to further invest. In 2012, L Capital is considering investing between 200 and 300 million dollars.
Speaking on the state of development of the various countries in Asia, Piette said there is a time difference in development of 5 to 10 years between the smaller countries and China, however, there may be positive surprised in the rate growth of these countries.