Capvent AG, the Zurich-headquartered fund of funds, has made the first close of its Capvent Asia Consumption Co-investment Fund (CACC) – a $150 million fund focused on making co-investments, alongside private equity funds, across emerging Asia and in the consumer sector.
While the amount raised for the first close is not known, CACC intends to complete its targeted corpus by early next year, it has said in a statement.
VCCircle was the first to report on July 25, 2011, that a private equity fund between Unilever Corporate Ventures (UCV) and Capvent is in works and the fund will be focused on consumption.
UCV, the venture capital arm of the world’s second-largest consumer goods company Unilever, is the anchor investor in the fund. CACC has also raised monies from leading institutional investors and private family offices in Europe and the USA.
“By creating a product that provides investors a pure-play but diversified investment pool of companies which are in the high growth space of consumption in Asia, we are able to access a sector that is growing much quicker than the GDP and thus, provides better rationale for good returns,” said Varun Sood, Managing Partner at Capvent.
With UCV as its partner and key investor, CACC is all set to leverage its knowledge base and global reach. Incidentally, this is UCV’s first foray into emerging markets with a strong consumption theme.
Being a corporate venture capital arm, UCV’s objectives are strategically aligned with that of the parent group. With stunted growth rates being seen in developed economies and a high pace of growth in consumption across Asia, UCV is now extending its corporate venture capital model (initially established for developed countries) to these emerging economies. About half of the sales of the consumer goods giant now come from the emerging markets.
“This investment represents an exciting strategic partnership that expands our venturing capabilities to emerging Asia and complements existing investments in VC and PE across North America and Western Europe,” said Martin Grieve, managing director of Unilever Corporate Ventures. (Read our earlier interview with Martin Grieve).
In terms of sector focus, the fund will make growth equity investments mainly in consumer products and related services businesses, with a focus on food & drink, home and personal care, beauty, water, cleantech, digital marketing, e-commerce, health and well-being. Having a broad Asia focus, the fund will not only make investments in India and China but also in Vietnam, Indonesia, Malaysia and Thailand.
This fund is essentially betting on the growing domestic consumption story of growing consumers in Asian economies, largely driven by favourable demographics and rising disposable income.
According to a report by investment advisory firm Espirito Santo Securities, while India’s exposure to the global economy has increased, it remains an overwhelmingly domestic consumption-driven economy. Private consumption growth contributed more than half to the GDP growth in FY11.
In addition to UCV, CACC has assembled a group of investors and an advisory board with experience in consumer products, retail, luxury and other consumer sectors, the asset management firm has added in a statement.
Capvent was founded in July 2000 by Managing Partners Tom Clausen and Varun Sood. From the time they have set up shop in India, Capvent has invested in 12 private equity and VC funds in the country, which have a total of 100 portfolio companies. Apart from a private equity fund-of-funds practice, it also invests directly into companies.
Formed in 2002, UCV has a portfolio of fund and direct investments with €600 million ($850 million) of assets under management. Like Capvent, it has also made two anchor investments in Physic Ventures and Langholm Capital – private equity firms based in North America and Europe.
Betting big on the burgeoning domestic consumption story, L’capital Asia, a private equity fund sponsored by the world’s largest luxury conglomerate Louis Vuitton Moet Hennessey (LVMH), has recently acquired 25.5 per cent equity stake in Genesis Luxury, a high-end luxury company that has been instrumental in marketing and distribution of brands such as Jimmy Choo, Bottega Veneta and Etro in India.