LVMH bets big on Chinese local brand

After nearly three years of negotiations, LVMH-backed private equity fund L Capital Asia recently held a press conference at the Shanghai World Financial Center to announce its plan to invest in Chinese domestic cosmetics brand Marubi, which LVMH hopes to propel into the global spotlight with a possible Dior partnership and Sephora distribution. 

According to the deal, the Singapore-based fund will officially become Marubi’s second largest owner. The fund will initiate strategic cooperation with Marubi in product development, design, advertising, public relations, marketing, retail management, team building, global marketing, and M&A. Although the stake and the amount of the investment have not been disclosed, many industry insiders have speculated that the fund will hold 49 percent equity share of the cosmetics brand, with an investment of $100 million.

“L Capital Asia has been fully aware of Marubi’s high-end positioning and steady growth, and we are very optimistic about the brand’s development and growth in the near future,” said Ravi Thakran, managing partner of L Capita Asia and LVMH’s Southeast Asia and Middle East Group President. Sun Huaiqing, CEO of Marubi, said at the press conference. Sun also pointed out that the agreement will become an important milestone for Marubi’s internationalization.

Marubi is a Guangdong-based biotechnology company, and it’s sales in 2012 reached 3 billion yuan (around $489 million). The company last year invested 100 million yuan in Guangzhou’s Zhujiang New Town, aiming to build a new industrial park for developing technologies. As Thakran told the Chinese newspaper Moneyweek, the reasons for choosing Marubi over other Chinese cosmetics brands included the company’s high product quality, solid brand equity, and strong management team. The deal was brokered by HSBC.