LVMH buys into Ochirly
French luxury goods conglomerate Louis Vuitton Moet Hennessy has paid US$200 million for a 10 per cent stake in fashion brand Ochirly.
The buyout gives L Capital, LVMH’s private equity arm, to hold a direct stake in the family-owned Ochirly which has total value of US$2 billion. Sources said L Capital has partnered with Citic Private Equity funds, a Beijing-based private equity arm of state-owned investment company Citic Group, in taking the stake.
While LVMH has not commented on the buyout, one person familiar with the transaction said the investment was not just about money; it gives L Capital an opportunity to break into China’s strong fashion industry while Ochirly gains recognition through having a global investor.
“The multinational luxury groups may provide emerging Chinese designers with a tremendous platform to expand into the global marketplace. This would give domestic designers direct access to the experience and connections which a multinational fashion group would have built up over years of doing business on an international level,” said Nick Debnam, partner at KPMG China.
LVMH and Groupe Arnault set up L Capital in 2001 with the aim of acquiring deals targeting consumer-driven sectors including luxury, health care and other retail goods.
L Capital has been purchasing stakes in Asian companies in the past years. It bought warrants and convertible bonds worth US$30 million in Hong Kong’s Emperor Watch and Jewellery in 2010. It also holds stake in Singapore’s Sincere Watch, Asia’s Charles & Keith and India’s Genesis Luxury Fashion.
Founded in the 1990s, Ochirly operates about 200 retail outlets in the mainland.