L Catterton seals $360m Asia strip sale

The identities of other consortium members were not disclosed, but two sources familiar with the situation told AVCJ that GIC is participating. L Catterton declined to comment on the matter.

Fund III, which closed on USD 1.45bn at the end of 2019, has made nearly 20 investments across beauty and personal care, consumer services, health and wellness, food and beverage, and pet care. Only portfolio companies that are already listed and those backed after the secondary process started – such as India’s Sugar Cosmetics – have been excluded from the strip sale.

Most of the proceeds will be used to make distributions to LPs. In addition, a portion will be redeployed into new investments. From the outset, Fund III has featured a provision allowing L Catterton to recycle a certain amount of capital.

Fund III launched in the first half of 2017 with a target of USD 1.25bn. By the end of 2018, it had completed a couple of closes and accumulated around USD 1bn in commitments. Fund III was the first Asia-focused vehicle raised after L Catterton was formed through the merger of US-based Catterton and L Capital, which primarily operated in Europe and Asia.

Seven investments had been completed and the fund was 45% drawn by the end of 2019. Most of those came in 2018. Deployment slowed over the following two years as L Catterton focused on rebuilding its Asia team following a series of senior departures, including that of Ravi Thakran, who led the regional business before and after the Catterton merger.

According to AVCJ Research, no deals were announced in 2019 and only two in 2020. Investment speeded up thereafter. After backing Indian digital behemoth Jio Platforms in late 2020, L Catterton completed seven deals in 2021 and two more in 2022 prior to Sugar Cosmetics.

Additions to the China portfolio in the past two years include beverage brand Genki Forest, bubble tea chain Heytea, Amazon seller aggregation platform Nebula Brands, and pet food brand Pure & Natural. The firm has also backed personal care business Ci Flavors and healthcare services provider PHC Group in Japan and beauty e-commerce platform Sociolla in Indonesia.

Dental aesthetics specialist Zenyum is positioned as a pan-Asia play, while footwear brand Birkenstock has a global presence. The latter investment was a cross-fund deal with teams in the US and Europe.

 

“Our research-led investment approach, together with our global experience, operating capabilities, and network of strategic relationships, has helped us strengthen the fund’s performance over the past two years, despite the impact of the COVID-19 pandemic," Scott Chen, a managing partner for L Catterton in Asia, said in a statement.

"The long-term growth prospects of Asia’s consumer industry remain intact, with the expansion of multiple categories underpinned by robust demand fundamentals, and we are well-positioned to capitalize on further investment opportunities."

The L Catterton strip sale is one of few transactions of this type seen in Asia. In 2017, Warburg Pincus sold a portion of every Asian deal in its 11th global fund to a consortium led by Lexington Partners and Goldman Sachs for USD 1.2bn. Two years later, Australia’s Blackbird Ventures completed a similar deal involving its debut fund. StepStone Global and HESTA were the investors, putting in USD 69m.

UBS advised L Catterton on the latest transaction.

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