L Capital Asia, the Asian private equity firm sponsored by LVMH Moet Hennessey Louis Vuitton (LVMH), has already made nine investments from its second fund, which is 70 percent deployed, L Capital Asia regional managing director Sanjay Gujral told Private Equity International.
Gujral was non-committal on the timing of the launch of their third fund.
L Capital Asia II reached a final close at US $1 billion in August 2014 after taking additional commitments from its management team and affiliates. It would have ordinarily looked at deploying the capital over three to five years, but had a very healthy deal pipeline, Gujral said.
The investor base for L Capital Asia II is widely diversified with a combination of institutional investors such as sovereign wealth funds, pension funds, endowments, fund of funds as well as family offices and high net worth individuals making for around 90% of total commitments, said Gujral. The sponsor contribution, including from LMHV, is about 10%, he added.
In most cases the private equity firm takes a minority stake in a company, but it will sometimes take a controlling stake, Gujral said. In all cases, the exit strategy would vary between trade sales or IPO or secondary sales, within three to seven years.
“The approach needs to be flexible in Asia, as capital markets are not a consistent avenue for exits,” he said.
Recently, L Capital Asia II took a majority stake in Singapore-based Crystal Jade, a Chinese cuisine brand with over 100 outlets across Asia, he said. The group executes a four-segment Chinese cuisine model which includes fine, family restaurants, casual dining and bakery.
Standard Chartered Private Equity (SCPE) was recently included as a co-investor in the deal in which it invested USD 52 million, according to a company release. The investment will primarily go towards funding the growth of Crystal Jade's network of outlets across Asia, as well as the expansion of its footprint internationally, it said.
Gujral said that L Capital Asia may choose to bring in a co-investor when it knows the co-investor and its potential well. “Jointly we can explore a much wider footprint,” he added.
Other companies in which L Capital Asia’s funds have taken a majority stake include RM Williams and Seafolly in Australia, Jones the Grocer in Australia and Singapore as well as Dondup, an Italian fashion business. The firm is also the single largest shareholder in 2XU in Australia.
The firm’s first fund raised US $637 million, with a final close in December 2010.
L Capital Asia seeks to acquire stakes brands that are aspirational, affordable and alternative, Gujral said, referring to them as “AAA” brands. Such brands benefit from strong demographic and consumer trends in Asia; enjoy healthy and sustainable operating margins and benefit from L Capital Asia's expertise in identifying and developing promising companies in the consumer space, he said.
L Capital Asia may also invest in non-Asian companies that want to expand in Asia, and where the firm can help accelerate their growth in the region, he said.
The firm recently partnered with M1 Group from Lebanon to acquire Pepe Jeans and Hackett, two fashion brands that have significant untapped growth potential in Asia.
LVMH, the French multinational luxury goods company, sponsors the private equity firm, as well as two other independently operated private equity businesses: L Capital (Europe) and L Real Estate.