LVMH unit eyes Asian brands

20 February 2012

SINGAPORE: L Capital Asia, the private equity group backed by luxury goods giant LVMH, is boosting its investment levels in promising brands and companies in markets like China and India.

To enhance its regional portfolio, L Capital Asia hopes the resources it has available should top $1bn in 2012, up from $650m year on year. Forming alliances with other investors will form a key part of this strategy.

"The reason we want to do a larger fund next time is primarily because opportunities in the segment are huge, and we see larger and larger companies coming to us," Ravi Thakran, managing partner of L Capital Asia, told Reuters.

One of the organisation's most recent investments was as the leader of a consortium taking a 10% share in Trendy International Group, a Chinese fashion label, for $200m.

Thakran suggested that China was a core target, as the presence of multinationals is making successful indigenous players in categories like fashion and premium spirits more keen to attract investors.

As such, while helping Chinese brands to expand into areas including Hong Kong, Macau, Southeast Asia and Taiwan was a possibility, local concerns must be the priority.

"International expansion is really secondary to the whole play," Thakran said. "The primary purpose is to protect the mainland market, protect market share, build brand equity further, be ready to take on this competition."

Among the other firms L Capital has backed are two Indian-based enterprises: Fabindia, which specialises in hand-made garments, and Genesis Luxury Fashion, a distributor of high-end goods.

Emperor Watch & Jewellery and Ming Fung Jewellery Group, both in Hong Kong, have received similar support. This status also applies to Charles & Keith, a fashion brand, and Sincere Watch in Singapore.

Robert Burke, of RBA, the consultancy, argued investing in these operators let LVMH tap sources of expertise in fields such as distribution, real estate and consumer insights.

"It's extremely difficult to build up an infrastructure like that from scratch for foreign retailers; you need to try and find an existing network," he said.

"Now, if LVMH wants to bring existing luxury brands into these new markets, they can either use the existing infrastructures or have a much better understanding of how to do so."

Data sourced from Financial Times/Reuters; additional content by Warc staff