Deal focus: L Catterton taps the China luxury story

L Catterton Asia has built a franchise around investing to build prominent fashion and lifestyle brands that appeal to the region's aspirational middle-class consumers. But the firm sensed that it was missing an important link in the retail value chain: an access point to people purchasing its brands online. The firm's recent $175 million investment in Chinese online luxury goods retailer Secoo, alongside Chinese e-commerce giant JD.com, is seen as a step toward correcting this imbalance. 

"The luxury e-commerce space is becoming increasingly important in the retail sector, and it impacts how brands think about their online strategy," says Ravi Thakran, a managing partner and chairman of L Catterton Asia. "With this investment we'll be able to play in both the luxury e-commerce and the China luxury space, which are poised for massive growth over the next five years."

L Catterton, with its ties to the Louis Vuitton fashion empire, is an attractive partner for Secoo as well. Since 2008, the online retailer has gained nearly 19 million registered members who shop for over 300,000 high-end lifestyle products and services through its online retail channel. 

Having posted a profit for the first time last year following its IPO on NASDAQ, the company still sees plenty of room for growth – and L Catterton's portfolio of global brands both in Asia and worldwide offers access to a wide range of products to offer its increasingly affluent and quality-conscious customers.

"Several of L Catterton's brands have already begun discussions with Secoo, especially in the high-end lifestyle segment," says Thakran. "We believe companies such as [online art marketplace] Artsy, [jewelry producer] John Hardy, and [Australian footwear maker] RM Williams all have huge potential in China, and Secoo provides a great platform to launch these brands in this market."

L Catterton also wants to help Secoo grow beyond its home market. The company already has a small division aimed at bringing Chinese brands to global consumers, and it hopes to jumpstart growth with L Catterton's brand-building expertise and global fashion connections.

JD, L Catterton's partner in the investment, is seen as another crucial contributor to Secoo's growth plans, providing support to get the company over any technological or logistical bumps in the road. The deal will also give JD access to Secoo's customer base and brand relationships and provide future opportunities for collaboration between the two online players.

"The strategic partnership with Secoo and JD allows us to leverage each other's strengths and focus on areas where we can provide the most value," Thakran says. "Our focus on working with brands, combined with JD's focus on logistics and e-commerce and Secoo's already established platform, places us in an advantageous position to address the concerns of the high-end online Chinese consumer"  

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