PARIS — L Capital Management is going shopping. The LVMH Moët Hennessy Louis Vuitton-backed investment vehicle said Friday it had closed its third round of funding, with commitments in excess of 400 million euros, or $533 million at current exchange.
The firm, whose previous investments include the contemporary brand stable of Sandro, Maje and Claudie Pierlot, plans to buy into between 10 and 15 European midmarket lifestyle and retail brands, it said.
“They are already looking at two or three companies in Europe,” a spokesman for L Capital said, without revealing details.
There is speculation that L Capital has kicked the tires of U.K.-based retail jeweler Aurum, owner of the Mappin & Webb, Watches of Switzerland and Goldsmiths chains. Aurum was put up for sale by Landsbanki Islands hf, an Icelandic bank, last year.
The economic climate in Europe is likely to see certain family or designer-owned brands thinking twice before rejecting financing, where in the past they may have held on tight to their independence.
“European brands are particularly interesting right now, because of the financial situation. It’s not as easy for them to get funding from banks as it has been in the past,” said John Mitchell, president of retail and luxury goods consultancy Robert Burke Associates.
There are several high-end European brands that may be in the market for investment. Market sources cited Charvet, Christian Louboutin and Kiton as potential targets for investors.
But L Capital has made a habit of investing in midrange firms that have a strong retail footprint already, including Gant, Pepe Jeans and Hackett Group.
“L Capital invests in brands that are too small or do not have enough of a luxury positioning for LVMH,” HSBC analyst Antoine Belge commented.
“They are the champions of retail, and there are not many specialist retail [investment firms] out there,” noted Karine Ohana, owner of boutique M&A firm Ohana & Co.
In the midmarket segment, companies that may be seeking investors include French dancewear and shoemaker Repetto, lingerie maker La Perla and high-end linen brand Frette, according to sources. The latter two are owned by San Francisco-based JH Partners, which may be looking to make an exit.
L Capital is also likely to target brands that have strong international expansion potential, especially in emerging markets.
“Changing demographics, consumer behavior and emerging new market segments in mature economies in Europe and the U.S., an increasing wealthy middle class and emergence of important, powerful economies in China, India, South East Asia and South America create significant demand for lifestyle brands,” L Capital Management chairman Daniel Piette stated.
The investment firm’s sister fund, L Capital Asia, made two acquisitions in February. The first was a minority stake in Chinese contemporary clothing firm Trendy International Group, which owns the Ochirly brand, one of China’s leading domestic labels in the fast-fashion segment, as reported. The second is an 8 percent stake in Indian ethnicwear retailer Fabindia, which has a total of 148 stores in five markets.
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