The transaction, which is slated to close early this year, brings together private equity investment and luxury products like never before.
“We are excited to announce this transformative combination and partnership with LVMH and Groupe Arnault,” says Catterton managing partner J. Michael Chu in a statement to the press.
“The breadth of our collective expertise will be second to none in the consumer industry, and we look forward to benefitting from the strength and global reach of the team…as we continue to seek out investment opportunities with significant growth potential.”
Scaling luxury
The perfumes and cosmetics business division at LVMH comprises renowned brands like Guerlain, Fresh, Make Up For Ever, Acqua di Parma, and Givenchy Parfums.
The luxury group specializes in five other sectors as well: fashion and leather goods, watches and jewelry, wines and spirits, selective retailing (which includes the Spehora business), and a division centered on lifestyle, culture and the arts.
These businesses and the consumers they cater to are progressively more engaged with a global culture and economy.
It’s this vast economic reality that the deal is meant to address. “The globalization of media and technology, combined with increasingly permeable geographic borders, is driving rapid consumer growth on an unprecedented global scale," explains Scott A. Dahnke, also a managing partner at Catterton.
"Together, Catterton and L Capital will create a global consumer investing franchise with unmatched access to resources in the industry. We expect this combination to further our mission of investing in high growth opportunities in categories with attractive consumer economics."
Far and wide
Catterton managing partners J. Michael Chu and Scott A. Dahnke will share the role of Global CEO for the new firm, which will be headquartered in Greenwich, Connecticut, and London.
To operate effectively in key regions, the new firm will have offices throughout Europe, Asia, and Latin America.
The formation of L Catterton is a logical next step for LVMH and its partners. “Having been investors in Catterton's funds since 1998, we have participated in its growth and success, evidenced by its strong track record and its distinctive culture,” affirms Bernard Arnault, chairman and CEO of LVMH and Groupe Arnault, in the press statement.
“L Catterton will provide investors with a unique value creation platform, bringing together our global network and industry expertise with Catterton's long-standing operational approach to building value in consumer investments,” he adds.
Objectives
LVMH and Groupe Arnault will own 40% of L Catterton, while the partners of L Catterton will own 60%.
And, the private equity group has ambitious plans: “L Catterton will become the largest global consumer-focused investment firm with six distinct and complementary fund strategies focusing on consumer buyout and growth investments across North America, Europe, Asia and Latin America, in addition to prime commercial real estate globally,” explains the press release announcing the agreement.
The group intends to close select successor funds and grow assets to over $12bn in the effort to “leverage its unique global network and expertise to partner with consumer businesses in all major consumer markets.”