StanChart, L Capital on the watch with Sincere

Sincere Watch has been up for sale since September last year, after Peace Mark, its Hong Kong-based owner, was revealed to have difficulties over repayments for $230 million owed to more than 50 creditors. Since then, the company has been selling its assets, as well as seeking potential buyers for Sincere Watch via liquidators Ferrier Hodgson in Hong Kong.

After the deal, the new share structure gives 26.3% equally to Singapore-based SCPEL and L Capital Asia, the $400 million private equity fund operated under LVMH Group, and Triple A Enterprises, an investment vehicle owned by Tay Liam Wee, son of the watch company’s
founder Tay Boo Jiang, yielding around 79% in total. The remainder is held by creditors ABN AMRO, BNP Paribas and ING, who provided S$500 million ($201 million) to Peace Watch when the company took over Sincere Watch for around $368 million. The three banks took 10%, 2.75% and 7.25% respectively, with a further 1% held by T Capital, which acted as financial advisor in the deal.

Under the new ownership, Tay will serve as Sincere Watch Ltd.’s Chairman and Group Managing Director. Alastair Morrison, Managing Director and Global Head of Private Equity at Standard Chartered Bank, and Ravi Thakran, Managing Director of L Capital Asia, will take nonexecutive director positions, as will John Batchelor, an Executive Director of Ferrier Hodgson representing the bank shareholders. Details were confirmed by SCPEL, though the deal size was not disclose. However, the original offer was understood to be around S$112.7 million ($81.6 million).

Regarding the parent company’s debt, Ferrier Hodgson Executive MD Rod Sutton emphasized in a statement that Sincere is 'ring-fenced' from Peace Mark, and employees, suppliers and customers should be assured that it will be business as usual for the company, with no changes in the way that Sincere operates.

Established in 1954, Sincere Watch, the world’s eighth largest importer of fine Swiss watches such as Dior, Bulgari and Chaumet, operates retail divisions including Sincere Haute Horlogerie and Sincere Fine Watches, as well as brand-specific presences. It also owns 75 % of Sincere Watch Hong Kong Ltd., which retails timepieces in Hong Kong, Macau, China, Taiwan and Thailand.

Amid the economic downturn, lower spending by consumers on luxury goods has been had a big impact on specialist luxury retailers. Demand for Swiss watch exports has actually fallen by around 15-16% as of May this year, according to analysts. However, L Capital’s Thakran said that the company will look for further expansion opportunities, enlarging its footprint in Asia, especially in China and India, which account for more than 64% of the wealth in Asia Pacific.

SCPEL’s Morrison told AVCJ, “The company will expand both in established markets like Singapore, given opportunities in the upcoming Integrated Resorts, and in growth markets such as China. We are taking immediate steps to move into the markets, but becoming established in huge markets like China takes many years.”

As Asian luxury goods markets have now started to show some signs of recovery, Morrison said that the new shareholders in Sincere are positive about medium-term prospects, and are investing for growth. “The shareholders are open to providing further financial support to Sincere,” he added.

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• Topics
• Southeast Asia
• Consumer
• Buyouts
• Alastair Morrison
• Standard Chartered Private Equity