Deal Worth US$200 Million, Valuing Ochirly At US$2 Billion
Ochirly has about 200 retail outlets across the Chinese mainland
The China market has obviously been pretty good to the luxury consortium LVMH Moët Hennessy • Louis Vuitton S.A., which posted forecast-beating 22 percent global growth in 2011 due heavily to Chinese spending both at home and abroad. Currently, dozens of LVMH-owned luxury brands, including Hublot, Chaumet and Loewe, are expanding into second- and third-tier cities in inland China, shrugging off concerns about a potential slowdown in Chinese spending this year. Placing a bet on greater consumption among China’s growing middle class, this week LVMH announced plans to take a 10 percent stake in the domestic Chinese fashion retailer Ochirly in a deal said to be worth US$200 million.
According to the South China Morning Post, LVMH’s investment in Ochirly would value the family-owned company at US$2 billion, and would mark the first time LVMH’s private equity arm, L Capital, has taken a direct stake in a mainland Chinese company. From the article:
According to Nick Debnam, a partner at KPMG China, “China has become the most important market for luxury and the global luxury players are clearly very interested to invest in China. There are a variety of options for investment in China, both in terms of developing existing luxury brands and building new brands.” Though this deal is the first investment by L Capital in a mainland Chinese company, it’s not the first for LVMH, which purchased the Chinese baijiu distillery Wenjun back in 2009.
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