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Private equity biggies vie for Rs 400 crore VLCC stake

L Capital, the private equity arm of LVMH, the world’s biggest luxury goods group, is vying with Kohlberg Kravis Roberts & Co (KKR) to buy up to Rs 400 crore stake in homegrown slimming and beauty services chain VLCC, said at least two people familiar with the matter, adding that the company is worth more than $300 million.
India-focused investment house ChrysCapital is another contender with the promoter, the Luthras, and existing investor Evertsone Capital short-listing three suitors, as they head for a final call in the next two-three weeks. VLCC is projected to end the current fiscal with a revenue of close to Rs 700 crore and an operating profit of around Rs 100 crore.
Singapore-based private equity firm Everstone Capital, founded by two former Goldman Sachs bankers, has 16% interest in the company and plans to offload shares depending on the valuation. The promoter too could offer some shares to the new investors, who will come in with a significant minority ownership. “The deal basically is to provide an exit to Everstone. And as a result, it hitches on valuation,” said one of the sources cited earlier, adding that after the deal VLCC is expected to launch an initial public offering within one or two years to tap public funds.
The Luthras, who hold just under 85% stake in VLCC, started life with a single outlet in a posh south-Delhi locality some two decades ago and now runs over 200 centres in the country. JM Financial is advising the company on the current investment deal. Evertsone and the Luthras could not be reached for immediate comments.
Another source said the recent surge in stock markets could prompt the Luthras and Everstone to keep alive the options of going public straightaway, if valuations offered by the three suitors don’t match expectations. Consumer services companies like Talwalkars and Speciality Restaurants, which listed on the bourses more recently, have seen their shares gain in the current market rally, he pointed out, adding that global investors were returning to the domestic consumption story.
L Capital, a strong contender to take the VLCC stake, has been bullish on the India consumer story for a while. Last year, it bought 8% stake in ethnic wear chain Fabinda from Wolfensohn Capital Partners. It also owns shares in fashion retailer Genesis Luxury Fashion and PVR Cinemas.
Rising disposable incomes and the desire to look good are fuelling a 35% growth of the beauty services industry, which is largely unorganized.
VLCC claims to be the leader in the country’s wellness space, which according to a recent FICCI-PWC report is said to be worth Rs 49,000 crore. The report said that companies are actively seeking public and private equity investments to fuel their growth.
Source: Times of India

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