Private equity firm L Capital has raised $1bn for its fifth fund, which is significantly larger than the $640m fourth vehicle.
The firm’s Asia managing partner Ravi Thakran told the Wall Street Journal that the firm could easily have exceeded $1bn, but it wanted to avoid deployment pressure.
Ten per cent of the fund was contributed by L Capital’s backer LVMH Moët Hennessy Louis Vuitton, while the rest came from institutional investors based in the Middle East, Canada, Europe, the US and Asia, including Australia.
He also said that the firm might launch an American fund within the next two years, but no firm decision on this has been made.
Speaking about the firm’s strategy in Asia, Thakran said that it will “zoom out of India” in the short term and 45 to 50 per cent of the new fund will be spent on deals in China.
He said, “Companies there have easy access to capital markets, they may have revenue of around US$80 million and Ebitda of US$1 million yet they can successfully raise funds through initial public offerings.
“Also, a large pool of capital was raised and dedicated to the nation four to five years ago so there are many participants chasing targets, which drives up valuations.
“We are driven by deal quality so have instead decided to explore deals in Korea, Japan and Taiwan, markets which we had formerly ruled out because of limited growth prospects.”
He added that Australia is also a great repository for Asia and “it’s like having the US on your doorstep.”
L Capital recently bought a 49.9 per cent stake in iconic Australian clothing and footwear brand RM Williams, which was the last deal from its fourth fund.
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