Catterton, LVMH, Arnault form consumer giant

The new partnership, L Catterton, will be 60% owned by Catterton, 20% by LVMH and 20% by Groupe Arnault and will be led by Catterton managing partners Michael Chu and Scott Dahnke.

Consumer specialist firm Catterton, luxury retailer LVMH and Groupe Arnault, the family office of Bernard Arnault, who is the chairman and chief executive officer of LVMH, are in an agreement to create L Catterton, a consumer-focused private equity firm.

L Catterton expects to grow its assets to more than $12 billion after some successor funds are closed, according to a statement. The entity will have “six distinct and complementary fund strategies” focused on buyout and growth investments across North America, Europe, Asia and Latin America, as well as prime commercial real estate globally.

The new entity will consist of Catterton’s existing private equity operations in North America, including its growth and buyout funds, as well as its Latin American funds, and LVMH and Groupe Arnault’s private equity and real estate operations in Europe and Asia held under L Capital and L Real Estate, the statement said.

Catterton managing partners Michael Chu and Scott Dahnke will head the new enterprise as global co-chief investment officers, while each fund will continue to be managed by its dedicated team.

The firm is on the cusp of raising new capital across multiple new funds, so the formation of L Catterton is timely for their fundraising efforts, a source close to the matter told Private Equity International.

In July 2015 Catterton began marketing its third flagship growth fund, Catterton Growth Partners III, targeted at $500 million, according to PEI Research & Analytics. The Pennsylvania Public School Employees’ Retirement System and the Missouri Local Government Employees’ Retirement System are two of the investors in the fund. Its predecessor, Catterton Growth Partners II, closed on $400 million in 2013, along with the firm’s seventh buyout fund, Catterton Partners VII, on $1.6 billion.

L Capital Asia II, which reached a final close on $1 billion in August 2014 with a 10 percent commitment from LVMH, had made nine investments by September, bringing it to about 70 percent deployed, as reported by PEI.

Catterton Partners will own 60 percent of the venture, with 20 percent held by LVMH and another 20 percent by Groupe Arnault.

LVMH and Arnault have been investors in Catterton since 1998, allowing the three entities to embark on this venture based on a “familiar relationship,” the source said.

LVMH operates in 80 countries and sees consumer-related demand and trends at an international level that would put the firm in touch with consumers’ ideas and trends around the globe, the source noted.

The different geographic regions in which the three entities operate and have experience are complementary, the source said. Catterton contributes operations in North America and Latin America, while LVMH and Groupe Arnault bring their businesses based in Europe and Asia.

L Catterton will be based in Greenwich, Connecticut, and London with a 120-person team across 17 offices. The firm will focus on the consumer sector in its entirety; any sub-sector within the space is fair game, provided businesses are well-poised for attractive growth, the source said.

The transaction is expected to close early this year.

Catterton, based in Connecticut, manages $4 billion in assets as of October 2015, according to PEI’s Research & Analytics.