August 2012
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L Capital plans LVMH-like model in India

PE firm L Capital is in talks with top Indian designers to create an Indian luxury house on lines with its parent company — Paris-based LVMH Moet Hennessy Louis Vuitton. According to sources, the company is in final stages of talks with two of India’s top fashion designers — Rohit Bal and Sabyasachi Mukherjee – along with specialist multi-designer retailer Evoluzione for the planned venture.

Along with consolidating their separate labels under a single corporate structure, each of them will get a chance to scale up and reach domestica as well as global markets. L Capital plans to invest close to Rs 200 crores in the venture, which is being planned as a company that will own significant minority stakes in the design houses of these well-known designers and will forge a joint venture with Evoluzione for back-end distribution business. Gradually, more known designers will be brought on board to expand the business horizons.

While the low consumer buying sentiment among consumers and lack of clarity over government’s retail FDI policy is holding back plans of many global giants, LVMH has faith in India’s luxury story in the long run. The luxury market in India, on which L Capital is betting big, has grown 20 times in the past few years to touch Rs 32134 crores, said a recent CII-AT Kearney report. It’s projected to reach Rs 81,444 crores by 2015.

So far, L Capital Asia, with its Rs 3,518 crores fund, has picked up eight per cent stake in ethnic-wear chain Fabindia from Wolfensohn Capital Partners, and bought 25.5 per cent in Genesis Luxury Fashion that sells Italian and British luxury labels such as Canali, Paul Smith, Bottega Veneta, Jimmy Choo, Etro and Tumi. It invested Rs 108 crores in PVR Cinemas recently. If LVMH-type structure comes up in India, it would definitely assist in consolidating and projecting Indian fashion to the world, besides helping brands with marketing, retailing and identifying suitable real estate to increase scale, pare costs, improve operating efficiency and boost profits.

What’s more, collaborating with LVMH will open Chinese doors to the Indian designers in the venture since L Capital has recently invested in two large Chinese fashion companies, Xinhe and Trendy International Group. Evoluzione, with a presence in markets such as Delhi, Chennai and Bangalore, will get reliability of supplies and better sharing of margins. And L Capital, through this platform will achieve its plans of strengthening foothold in India.

That’s not all, as a part of its strategy to strengthen India presence, L Capital Asia, roped in Sanjay Gujral as India MD, from Everstone Capital last year and after a year, in July 2012, he was promoted as Regional MD of L Capital Asia, with three significant private equity deals achieved under him.

Followed by Gujral, in May, L Capital Asia hired Uday Mehra, a retail veteran who has spent 20 years with global brands such as Tommy Hilfiger and Nike to expand its peoples’ strength.
Source : Fashion United

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