Raising the Bar on Private Equity in Beauty Care

L Catterton Partners has raised the bar on the private equity (PE) world, taking strategic investment capital to a whole new level. PE has transformed over the decades from the financial engineering of the classic leveraged buyout of yesteryear to today’s sector-focused funds, which offer not only capital but access to industry-specific resources ranging from operational- and brand-building expertise, to in-house management talent, to key customer relationships.

Catterton, a leading consumer-focused PE firm; LVMH, the $70 billion luxury conglomerate; and Groupe Arnault, the family holding company of LVMH Chairman and CEO Bernard Arnault, announced a new partnership to create L Catterton. According to the company, L Catterton will become the largest global consumer-focused investment firm, with more than $12 billion in assets under management following the close of the combined successor funds.

We are beginning to see the worlds of PE and strategic buyers collide. PE firms are looking to differentiate their capital in a crowded sea of billion-dollar financial sponsors and corporations that are looking for opportunities to leverage their strategic resources and invest earlier in high-growth consumer brands. We will continue to see strategic players set up PE arms (á la Unilever Ventures and Weston Capital, the investment arm of George Weston Ltd., which owns Loblaws and Shoppers Drugmart) and PE groups align themselves with strategics (á la B&B Capital which has a relationship with Walgreens Boots Alliance).

The L Catterton merger promises to provide a unique combination of global network, branded consumer expertise, operational experience, and differentiated access to resources in the industry. L Catterton will leverage the operational and brand-building PE expertise of Catterton and L Capital with the deep strategic resources of LVMH and Groupe Arnault.  L Catterton hopes to offer the investment allure and upside potential of PE with the resources and value-add of a true strategic partner.

In the world of beauty, LVMH owns an impressive portfolio of prestige brands, most notably Sephora. Other LVMH prestige beauty brands include Benefit Cosmetics, Make Up For Ever, Acqua di Parma and Fresh. Catterton Partners also brings deep experience in the beauty sector with current investments including Cover FX, Intercos Group, and StriVectin.

L Catterton will be led by Global Co-CEOs J. Michael Chu and Scott A. Dahnke, currently Managing Partners at Catterton. The headquarters of the investment group will be located in Greenwich, Conn. and London, U.K., with regional offices across Europe, Asia and Latin America. Under the terms of this agreement, L Catterton will be 60% owned by the partners of L Catterton and 40% jointly owned by LVMH and Groupe Arnault.