The former head of the Asian arm of a private equity firm backed by LVMH plans to launch his own fund this year, having already joined the latest Wall Street trend with a “blank cheque” company listing in New York.

Ravi Thakran will launch Asia 3.0, a private equity fund of between $1bn and $1.5bn targeting Asia’s consumer industry, he told the Financial Times.

The Singapore-based fund will focus on taking minority stakes to support Asian entrepreneurs “who are ready to go from [a] local to regional and eventually global journey”, said Mr Thakran, who founded the Asian division of LVMH’s private equity arm, formerly known as L Capital, more than a decade ago.

Mr Thakran continued leading the Asian unit after LVMH and Groupe Arnault joined forces in 2016 with US private equity firm Catterton to form L Catterton.

The fund will attempt to capitalise as Asia’s growing middle class spend more on sectors such as personal care, hospitality, “experiential retail” and lifestyle. Those markets are forecast to grow from being worth $20tn to $36tn in the next decade, according to the Brookings Institution.

The India-born private equity veteran remains chairman emeritus of L Catterton Asia, and former colleagues have joined him to help establish the new fund. L Catterton declined to comment.

“The idea is to create 25 $1bn global brands from Asia,” said Mr Thakran, who while running L Catterton Asia helped develop six companies that passed $1bn in sales. They include PVR Cinemas, the cinema operator with most screens in India, and Chinese beauty brand Marubi. 

The plans for the fund come after Mr Thakran, who is also LVMH chairman for south-east and south Asia as well as the Middle East and Australia, last week joined one of the hottest trends on the US equity market by raising $225m via a special purpose acquisition company (Spac) listing on the New York Stock Exchange.

The vehicle, in which LVMH, the world’s largest luxury goods group, and L Catterton hold minority stakes, will use proceeds to invest in “businesses with premium brands that offer an aspirational lifestyle experience to consumers”, according to its prospectus.

“It most likely will be an American brand or a European brand which is already well known but has underpenetrated, under-leveraged Asia,” Mr Thakran said of the target for the Spac, adding it would have a valuation of at least $1bn. Companies involved in wellness — fitness, natural organic skincare or plant-based foods — or premium spirits are among potential targets.

Proceeds from Asia-backed Spacs listed in the US have surged threefold to $1.1bn this year from 2019, according to Refinitiv. But they still account for less than 3 per cent of total funds raised via “blank cheque” US listings in 2020.

Critics argue these vehicles lack transparency, benefit founders disproportionately and may attract investors with no interest in becoming long-term shareholders.

Johan Sulaeman, academic director of the National University of Singapore business school’s finance programme, said the fact that Spac sponsors often receive compensation regardless of the long-term performance of the target firm generates potential conflict of interest. 

The recent boom in Spac listings will also add to the dry powder already accumulated in private equity, potentially pushing up valuations for target companies, he added. “It is very fertile ground for a bubble”.

But according to Mr Thakran, Spacs backed by industry veterans offer target companies access to public capital, experience in running a business and a chance to grow globally while also retaining a stake in the firm.

“We do not want to invest in something we don’t know,” he said. “We only invest in something . . . [where] we can be there at the board level, at the company level” to help on anything from product design to marketing, branding and strategy.

Source: Financial Times

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