LVMH Group’s Equity Fund L Capital to Invest in Indian Businesses in Lifestyle Segment

Emerging markets are turning out to be the lifeline for the luxury brands. The rapid growth of the Chinese economy has made it the focus of the luxury goods industry. At the same time some of the dominant players are exploring the potential in India as it has witnessed a phenomenal growth in disposable incomes of the urban population. LVMH Group, the largest luxury goods conglomerate in the world is launching a private equity fund in India. L Capital, which is already present in New York, Madrid, Milan, Shanghai and Singapore, will invest in India from its fourth fund, which is dedicated to Asia and has a corpus of $650 million. Ravi Thakran is the Managing Partner of L Capital. He explained that the fund is looking to invest in companies in Asia from the lifestyle sector. For India their focus is not top end luxury at the moment. He was of the opinion that the high end designers in India were unable to cash in on the growth in the Indian economy by limiting themselves to couture which does not reach more than 500 of the richest families in India. According to him it is the ready to wear segment that offers the opportunity for dramatic growth.

L Capital is a Paris based fund which was launched in 2001. They currently hold stakes in 21 companies worldwide who are into businesses like personal care, wellness and home and family goods. Mr. Thakran moved to the fund from the Swatch Group where he helped the launch of Indian Jewelry brand Tanishq in the UK. He believes that Asia is becoming the centre stage of global trade and China and India have emerged as pillars. However India lags far behind China and does not have the scale as yet to support a brand building exercise. In China, L Capital has already identified 10 businesses that are in the range of $200 million to $250 million and is actively considering investing in them. However, in India the top designers who dominate the fashion scene are still struggling to hit the $100 million mark.

India lacks the infrastructure, a distribution network and adequate capital. Indian fashion businesses suffer because the creative force, the designer, is forced to look after operations due to lack of resources. L Capital is looking to bring in expertise on operational improvements in areas such as product design, logistics, store design, visual merchandising, talent search and training and development. He will be looking for deals in shoe, apparel and wine businesses, makers of lifestyle furniture, beauty brands, apart from skincare centers and spas. He believes that with the know how they propose to bring to these companies these brands will really be able to unleash their potential. New consumption is rising in India. When aspirations and disposable incomes rise the sectors they invest in generally benefit from increased consumption. And once the infrastructure is in place it will become feasible to transform some of the recognized businesses in India into brands with much greater economic value. Ready to wear will also become profitable only when it can achieve volumes.

Via: online.wsj

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