PE veteran behind LVMH arm launches own US$500m Asia fund

Singapore

PRIVATE equity veteran and ex-LVMH executive Ravi Thakran has launched a new US$500 million growth fund less than two months after securing his first special purpose acquisition company (Spac), at an unusually quick pace to capture growing exuberance in Asia's consumer industry. (see amendment note)

The US$500 million GCC Asia growth fund will target younger companies in South-east Asia, India and the Middle East that have at least US$100 million in revenue and a positive Ebitda of US$10 million. Ticket sizes could range between US$10 million to US$50 million for this fund.

Mr Thakran, who founded the Asian division of LVMH's private equity arm, will also launch a second PE fund this year, with a targeted war chest of US$1 billion to US$1.5 billion. The fund, called Asia 3.0, will focus on mature companies in Japan, China, South-east Asia and Australia.

Ticket sizes could range from US$100 million to US$200 million, the former L Catterton Asia managing partner added.

These Singapore-based funds will aim to take on a 25 to 40 per cent stake in companies representing "the next generation of Asia's consumer industry", which must be both digitally savvy and socially responsible in consumption. This is an important prerequisite as it reflects the consumption pattern of tomorrow, he said, adding that future generations will be more discerning.

"Retail companies need to understand the shift in consumer behaviour... Consumers today are not only focused on the product, but also their experiences with the product, and brands that can create incredible and intimate experiences for consumers will be able to differentiate themselves," he said.

Next generation consumers will take note of both experience and brand values, Mr Thakran added. "Ethics, responsibility and sustainability will have a larger role to play as we move forward, consistent with shifting mindsets.

"We hope to build the next wave of such future-forward companies in Asia."

Mr Thakran's goal is to build 25 US$1 billion companies through these vehicles, which is no easy feat. But considering that the ex-L Catterton head has already helped develop six companies that have passed US$1 billion in sales during his time there - including Singapore darling Charles and Keith - he remains confident in executing this grand plan.

Mr Thakran, formerly chairman emeritus of L Catterton Asia, personally brought the Wong brothers behind Charles and Keith under his wing in 2011, after L Capital took a 20 per cent stake in the shoe company for more than S$30 million. (see amendment note)

They worked together on branding, marketing and expansion overseas to markets like India, China and the Middle East. The Singapore-based shoe brand now has over 7,000 employees and 700 outlets worldwide.

Charles and Keith has grown 10 times in revenue since 2011, and about 15 times in profit, said Mr Thakran.

LVMH has since sold their stake back to the Wong brothers, giving the brothers a full 100 per cent equity in the company. He told BT that when the time came for L Capital to divest their shares in Charles and Keith, they decided to approach the brothers first. We could have sold it to the highest bidder, said Mr Thakran. "But there is also great value in having a long-term advocate and friend."

Mr Thakran brings the same philosophy to his new ventures. The industry veteran, who is also former group chairman of LVMH South and South-east Asia, Australia and New Zealand, in September also raised US$225 million through a Spac listing in the New York Stock Exchange. (see amendment note)

Spacs have recently seen a surge in popularity as companies increasingly seek an alternative route to public markets. These blank cheque vehicles, which are designed to take companies public without the lengthy scrutiny of the traditional IPO process, have raised US$69.7 billion so far this year, already eclipsing last year's US$16.2 billion by more than four times, according to data from Bloomberg.

Looking at a strong pipeline of companies in fitness, health and wellness as well as outdoor sports, Mr Thakran is positive that his team might just be able to secure a deal in just six to nine months.

They are eyeing some billion-dollar assets in America or Europe in these categories that have yet to penetrate the Asian market, he said.

Critics might argue that the influx of Spacs would reduce the quality of deals available and cause sponsors to overpay for businesses just to get a deal done. However, Mr Thakran said his team does not compete on price as other financial advisors might, but is more focused on the value they can bring.

His team consists of industry veterans such as himself and executive chairman of Cé La Vi and Crystal Jade, Mark Bedingham, as well as those that have extensive investment experience in Asia such as former Franklin Templeton executive Lisa Myers, he added.

"Good companies might be fielding many offers from investors; But not all Spac sponsors - the majority of which consist of financial investors from hedge funds and mutual funds - have the expertise to help brands expand and further their trajectory in Asia like we do.

"We have an advantage as we can value-add to the company and bring it further; founders see that too."

Amendment note: An earlier version of this article incorrectly stated that Ravi Thakran remains the chairman emeritus of L Catterton Asia. He is in fact the former chairman emeritus.

Amendment note: An earlier version of this article incorrectly stated that Ravi Thakran remains at LVMH. He has since stepped down from his role.

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