PE fund Brands and Beyond seeks to invest $70 mn in luxury brands
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New Delhi: Delhi-based private equity (PE) fund Brands and Beyond is looking to invest $70 million in home-grown luxury and lifestyle brands over the next three years. Backed by large families from Europe, Singapore and India, the fund has chosen India as its base after five years of market research, and plans to take 12-14 Indian luxury brands to the global stage.
“Indian luxury market is still small. There is a lot of potential in Indian brands. International markets are big and structured, and growth is much easier. We want to take Indian brands international,” said François Arpels, founder and managing director of Brands and Beyond. He was speaking on the sidelines of the LyFe Symposium, an annual conference of global luxury think tank the LyFe. Arpels is also on the advisory board of global skincare brand Skin Inc. and Taiwanese fine jewellery designer brand Cindy Chao.
The PE fund is looking to invest in luxury brands across categories such as beauty, ready-to-wear, accessories and jewellery, which Arpels described as “non-ethnic” but in keeping with Indian design and aesthetics. “Right aesthetic, non-ethnic style and keeping the Indian DNA intact in the products could very well be successful internationally. Indian brands can capitalize on the wealth of the nation in crafts. We are looking at such 100% ‘made in India’ brands,” he said, without disclosing the details of the brands the fund is looking at. Speaking about the challenges of luxury brands in India, Arpels said brands suffer from lack of infrastructure here. “There is no typical high-street in India. Additionally, real estate cost is high, which poses difficulties for global luxury brands,” he said.
Rajat Wahi, partner and head (consumer markets) at consulting firm KPMG, agreed: “There is (a) real estate challenge plus the consumption story of luxury in India is very small.”
The big opportunity here, Wahi said, is to invest in Indian brands and take them to international markets. “The cost will be high but there is an opportunity to make these brands transcend Indians and go on to become aspirational for Europeans, Italians and other nationalities,” he said.
The Indian luxury market was estimated at $14 billion in 2015 and is currently expected to grow at a compound annual growth rate (CAGR) of 14-15%, according to data from KPMG. The market grew at a CAGR of 20% between 2012 and 2015. The slowdown can be attributed to demonetization of high-value currency notes and crackdown on black money.
The Indian luxury market, however, is close to 1% of the global luxury market, according to industry estimates.