L Capital Asia blows through target

The private equity firm has made a first and final close on its $950m hard cap six months after launch, raising what is possibly the region's largest sector fund ever.

L Capital Asia, the private equity arm of Louis Vuitton Moët Hennessy (LVMH), today closed its second private equity fund oversubscribed after raising $950 million, according to a source with direct knowledge of the matter. 

Originally targeting $800 million, the firm planned a first close in July, but pushed through to make a first and final close on the $950 million hard cap.

The fund, which will make investments in Asia's luxury retail and branded goods sectors, attracted a “decent, broad mix of investors”, including sovereign wealth funds and pension funds from North America, Europe and Asia, according to the source.

JPMorgan Private Clients was the largest aggregate LP, making up a “pretty high percentage” of the fund, while UBS acted as the placement agent for the fund. 

As it is also the first closing, L Capital is yet to make any investments and has a relatively young portfolio. The firm raised $640 million for its debut vehicle in 2010 after two years in the market, with JPMorgan Private Clients making up close to half of the fund. So far it has realised two investments. 

In a tough fundraising environment, L Capital’s fast fundraise is surprising and is linked to the firm's access to the LVMH brand and operational capabilities in the luxury sector, the source told Private Equity International. 

[L Capital Asia II] is probably the largest sector fund ever raised in Asia. It may be a sign of things to come and it will be interesting to see how sector funds do going forward

Industry source

“The LVMH platform and how the fund works and is integrated and how they help portfolio companies [is attractive]. The operational angle of it really caught people’s attention. These days, everyone talks about operations and value-add, but what L Capital Asia can do really stands out in comparison to what their peers do in Asia.”

The fund also suggests a trend toward more sector-focused vehicles in Asia. Earlier this month, for example, press reports said  that media moguls Bruno Wu and Thomas Middelhoff launched a $500 million media-focused vehicle to tap expansion opportunities in China.

“[L Capital Asia II] is probably the largest sector fund ever raised in Asia. It may be a sign of things to come and it will be interesting to see how sector funds do going forward because of course they are pretty powerful in the US and starting to gain traction in Europe. But in Asia, to get a sector fund you really need to convince people of the expertise,” commented PEI’s source.