Deals not hit by West Asia war: L Catterton

MUMBAI: The West Asia war hasn't slowed down the pace of investments for L Catterton in India which is betting on the country's long-term growth potential where a large cohort of young and digital savvy consumers alongside rising incomes bode well for consumption, providing enough and more investment opportunities, top executives at the firm said.

"Even if disruption happens, inflation creeps up a bit with the crisis in West Asia, India today has the wherewithal and resources to battle its way through the short-term crisis that may happen. When we look at India and the consumption story, we should not be shaken by the short-term turbulence. India is going to be the largest consumer story for many years to come," said Sanjiv Mehta, executive chairman at L Catterton India.

Backed by French luxury group LVMH and Groupe Arnault, the family holding company of LVMH CEO Bernard Arnault, US-based L Catterton is in the midst of raising a $400 million India-focused fund (with an option to expand it to $600 million), its first for the region as the consumer-focused private equity firm seeks to ramp up deals in India, where global and local investors are lining up to get a slice of one of the world's hottest consumer markets. In 2024, the company roped in Mehta, former CEO & MD at Hindustan Unilever (HUL) to lead their India investments.

"About 75% of our deal pipeline is proprietary. None of them has been impacted by the West Asia crisis. For us, the opportunity for investments is in many ways far greater than the current market," said Vikram Kumaraswamy, partner at L Catterton India. adding that as consumption shift from unbranded to branded and unorganised to organised gains pace, it will widen the scope to invest.

L Catterton has backed Indian companies including Haldiram's, Drools, Sugar Cosmetics and Jio. Prior to the launch of the India fund, its investments in the country used to be routed through its Asia funds. Of the targeted $400 million, close to $200 million has been raised as part of the first close. The firm has deployed over $100 million through the India fund so far, making three investments-Farmley, Haldiram's and Healing Hands Clinic in a span of six months compared to its earlier pace of four investments in two years through the Asia fund.

Mehta and Kumarawamy said that L Catterton does not engage in 'bidding wars' and all its investments have been made at a 20%-40% lower valuation on an average over market benchmarks. "We don't just provide capital which in many ways we believe is a commodity, but we help the investing companies with building capabilities," said Mehta.

Drools and Haldiram's are the two portfolio firms that are IPO-ready, the executives said. Following the Haldiram's deal, several family-run businesses have approached L Catterton for potential investments, Mehta said. "We will invest wherever we can create value. India is such a big market, even at the bottom of the pyramid, you can create value if you have a cost advantage," said Mehta.

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