L Catterton, JD to invest $175m in China’s Secoo

According to a statement, the investment will take the form of a convertible note worth $175 million issued to both investors representing a certain number of Class A ordinary shares in Secoo, along with a warrant entitling L Catterton to purchase 500,000 American Depositary Shares (ADS). Two ADS represent a single Class A share.

The note can be converted into shares and the warrant can be exercised after the first anniversary of the closing of the transaction. Any outstanding principal under the note will bear interest at 8% compounded per year until the third anniversary of the close. L Catterton and JD will have the right to appoint together one director and one observer to the company’s board.

In addition to the investment, L Catterton has agreed to allow Secoo to access its network of luxury brands, and also to help the company enhance its brand presence and operating efficiency.

“We are excited about this strategic partnership with L Catterton Asia and JD,” said Richard Li, chairman and CEO of Secoo. “By establishing relationships with leading partners in the consumer, luxury goods and e-commerce spaces, Secoo is poised to gain invaluable name recognition and further boost the company’s reputation in the international luxury consumer space.”

Secoo was founded in 2008 and offers more than 300,000 high-end lifestyle products and services through its online shopping channel, which had 18.7 million registered members as of December 2017, according to its annual report. It targets well-educated professionals in the middle to high income segment.

For the year ended December 2017, Secoo’s revenue came to RMB3.7 billion ($566 million), up from RMB2.6 billion the year before. Over the same period, the company went from a net loss of RMB29 million to a net profit of RMB95 million.

Secoo has a number of private equity backers, including IDG Capital, CMC Capital, Ping An Ventures and Ventech Capital, which currently hold stakes of 19.6%, 9.4%, 7.4% and 5.8% respectively. The company raised about $140 million in its IPO on NASDAQ last year, with all of its investors retaining their stakes.

L Catterton is currently raising its third Asia fund, which launched last year with a target of $1.25 billion. The firm invests in aspirational, affordable and alternative mid-market brands in Asia. Its portfolio in Greater China includes shopping mall operator Sasseur and beauty brands Marubi and Dr. Wu.

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• Topics
• Greater China
• Technology
• Consumer
• PIPEs
• Expansion
• China
• TMT
• L Catterton
• JD.com
• Growth capital