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PE Writes Cheques to Tap EM’s Emerging Middle Class

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March 20, 2014

The interest in luxury labels and businesses continues to be attractive for certain PE groups. This week the  WSJ reported that L Capital Asia, one of the private equity arms of LVMH Moët Hennessy Louis Vuitton is buying a stake in an upcoming nightclub chain called Ku Dé Ta.

 

It only has a couple of locations in Singapore, Bangkok, Paris, and Hong Kong at the moment but aims to set up business in some of the world’s fastest growing cities, such as Dubai, Rome, Miami and Beijing. It is more of a growth capital injection than a classic buyout.

 

The report recaps similar deals in the region, for example, Carlyle also has been targeting Asian luxury properties, such as a Chinese designer hotel operator. In Europe, Blackstone opted for a luxury fashion label when it bought a minority stake in Versace recently,  according to an article the WSJ.

Status symbols and upscale brands can be good businesses for PE firms if they are managed well. Just this week the FT is reporting that the PE backers of Blue Buffalo, an upscale dog food company that sells gluten free and beef based menus, are poised for high performing USD 2 billion exit in its IPO. Blue Buffalo is backed by Invus, an evergreen PE fund that belongs to several wealthy European family offices.

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