Fosun buys into Italian luxury brand

The PE arm of China’s largest private conglomerate has invested in Italian luxury brand Caruso and aims to bring it into China.

Shanghai-based Fosun International, China’s largest private conglomerate, has acquired 35 percent of Italian luxury menswear maker Caruso, according to a joint statement.

The investment came from one of Fosun’s private equity funds, though it was not clear which one. 

“We are interested in investments linked to the secular trend of manufacturing and consumption upgrade in China,” said Guo Guangchang, chairman and founder of Fosun Group in the statement, explaining the rationale for the investment. 

We are interested in investments linked to the secular trend of manufacturing and consumption upgrade in China

Guo Guangchang, chairman and founder of Fosun Group

“Fosun will leverage its own competitive advantages to help Caruso expand in the China market as well as bringing this precious made-in-Italy brand to the Chinese consumers.”

Umberto Angeloni, president and CEO of Caruso, added that Fosun will help position Caruso as one of the main players in China’s “new luxury” market, according to the statement. 

“We will present the international and especially the Chinese luxury consumer with a brand that is more niche and a product that provides more value than what is being offered today,” he said.

Other firms have also invested in European luxury brands with the intention of growing the brand in China. Last year, Euro-China growth capital firm A Capital teamed up with a Chinese luxury goods distributor to invest in Danish highend electronics giant Bang and Olufsen, Private Equity International reported earlier.

However, cross-border deals that involve growing any foreign luxury brand in China carry a high execution risk, William Shen, senior partner of Headland Capital Partners, said in a past interview with PEI.

“It may be a luxury brand, it may have certain history, but the consumer awareness is probably very low,” he said. “Think about marketing cost to make consumers aware of this brand, of this heritage, and then try to price it at a premium to competing brands already in China. It’s going to be very difficult.”

Shanghai-based Fosun Capital, Fosun's private equity arm, has roughly $2.6 billion (RMB 16 billion) in assets under management. It manages six funds including one US dollar fund, one QFLP (Qualified Foreign Limited Partner) fund, two RMB funds and two real estate RMB funds, according to PEI’s Research & Analytics division.

Two of the six funds are currently in the market, both with 2013 vintages. The India Growth Fund is targeting $1 billion and will be the firm’s first foray into investments in India. The China Momentum Fund, a $1 billion vehicle, has raised $ 525 million as of August 2013, PEI reported earlier.