L Catterton's Asia team to spin-out, raise growth fund

The group includes 12 of L Catterton’s 14 Asia-based partners, led by Ravi Thakran (pictured), the managing partner and chairman for the region. They have agreed a management buyout of the first two funds raised by L Capital Asia, set for completion on June 1, according to industry sources. The prospects for Fund III – which launched in 2017 with a target of $1.25 billion and is set for final close of $1.55 billion – are uncertain.

“We are forming a joint venture with L Catterton to create an Asia growth fund. It will be majority owned and managed by members of the Asia team,” Thakran told AVCJ.

The growth fund, which is scheduled to launch in July, will target deals below $100 million so there is minimal crossover with L Catterton’s strategy. It is understood that LVMH, as well as several of its senior executives, will invest in the new vehicle. The CEO of the luxury goods giant will serve as an advisor.

Thakran declined to comment on Fund III. A source familiar with the situation said that meetings will be held with LPs over the coming weeks as to how to proceed. Investors may decide to support L Catterton, with the firm hiring additional investment professionals in Asia; replace the GP with another manager; or take back their commitments. L Catterton did not respond when asked to comment on the spin-out. 

Sponsored by LVMH, L Capital Asia was established in 2009 – eight years after the European franchise – with a brief to invest in aspirational, affordable and alternative mid-market brands. Its debut fund closed at $637 million in 2010 and deployed $911 million in total capital, including co-investment.

A second fund closed at the institutional hard cap of $950 million in 2014. A feeder fund established by J.P. Morgan’s private banking business is said to have accounted for about half of the total. The final close of $1 billion, including the GP commitment, came a couple of months later. Co-investment alongside Fund II stands at $707 million.

In early 2016, it was announced that L Capital’s existing private equity and real estate operations in Europe and Asia would merge with Catterton's North American and Latin American business. The partners of L Catterton own 60% of the business, with LVMH and Groupe Arnault – the family holding company of Bernard Arnault – jointly owning the remaining 40%.

In the past 12 months, L Catterton’s investments in Asia include India-listed integrated fashion retailer Future Lifestyle Fashion, Chinese e-commerce platform Secoo, Chinese fitness club operator Will’s Group, and Tokyo-based eyewear retailer Owndays. The latter represented the firm’s first deal in Japan.

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• Topics
• Fundraising
• GPs
• Greater China
• South Asia
• Southeast Asia
• Australasia
• Consumer
• North Asia
• L Catterton
• L Capital Asia
• Asia