L'Oréal makes LP commitment to Cathay VC fund
L’Oréal will support the second fund being raised by Cathay Innovation, the VC affiliate of Cathay Capital Private Equity. The company wants to build ties to the beauty tech start-up ecosystem in China, its second-largest market.
The fund has a target of EUR500 million ($555 million) and reached a first close of EUR320 million in June. A final close is imminent, according to a source familiar with the situation.
L'Oréal is participating through BOLD - Business Opportunities for L'Oréal Development - a corporate venture capital fund launched in December 2018. The vehicle aims to take minority stakes in innovative companies and brands with high growth potential. Target business models range from marketing and retail to supply chain and packaging.
The French cosmetics giant's value-add comes in the form of expertise, access to professional networks, and mentorship. In China specifically, it is keen to collaborate with beauty tech start-ups, supporting product testing efforts and allowing them to leverage the L'Oréal brand.
Cathay Innovation's first close surpassed the entire corpus of its debut vehicle, which closed at $320 million in 2017. LPs re-upping for Fund II include Bpifrance, Groupe ADP, and Michelin. Hotel operator Accor, JCDecaux Holding – the investment office of the Decaux family – and beverage maker Pernod Ricard are among the new participants.
"China is a breeding ground for innovation in the new uses of disruptive technology, and in particular in the world of beauty. We will work to identify new emerging trends and collaborate with the most promising startups. Together with L'Oréal teams and visionary Chinese entrepreneurs, we will develop new innovations for consumers in China and the world at large," Mingpo Cai, founder and president of Cathay Capital said in a statement,
Founded in 2006, Cathay Capital has made 119 investments and its assets under management stand at EUR2.8 billion.
Cathay Innovation was established in 2015 with the backing from Bpifrance and China Development Bank Capital to support technology start-ups and enable cross-border collaboration. The portfolio includes Hong Kong-based mobile operating system developer KaiOS, self-driving technology specialist Momenta, and social e-commerce platform Pinduoduo.
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