Foreign consumer-focused investment firm launches first yuan-denominated fund to raise 2 billion yuan
Published: Nov 01, 2022 06:46 PM
Chengdu Hi-tech Industrial Development Zone Photo: VCG

Chengdu Hi-tech Industrial Development Zone Photo: VCG

L Catterton, the private equity firm backed by luxury giant Louis Vuitton Moet Hennessy (LVMH), said it aims to raise 2 billion yuan ($274 million) in its first yuan-dominated fund as more foreign investors pledge confidence in investment in China.

According to an announcement L Catterton posted in Chinese on WeChat, the first phase of the fund will be based in Chengdu, Southwest China's Sichuan Province. The first-close for the yuan-denominated fund has been completed, and it will focus on investing in upstarts in the consumer sector. 

The partners for the fund are mainly local government financial investment platforms, top global consumer enterprises, food and beverage industry giants, and listed companies in the beauty and apparel industries, L Catterton said.

L Catterton said that it remains bullish on the development of China's consumption sector, boosted by the country's large market scale and continued upgrading.

"With the launch of our first yuan-dominated fund in China, we will be fostering more Chinese consumer brands into the international market. We look forward to helping the invested companies and partners to complete the integration of industrial resources on a global scale," Li Jing, head of L Catterton’s RMB fund said.

L Catterton previously invested in Chinese soft drink brand Genki Forest and HEYTEA.

It is win-win cooperation for LVMH-backed funds to continue to expand in the Chinese market, Chen Jia, an independent research fellow on international strategy, told the Global Times.

"For luxury groups, emerging markets in Asia, including China, are of strategic importance as a considerable part of their stable profits," Chen said.

China's retail sales rose for a second consecutive month in October, reaching 4.05 trillion yuan, up 4.9 percent year-on-year. The growth rate was 0.5 percentage points higher than September, the National Bureau of Statistics said.

A number of foreign investments and overseas partners have recently expressed their confidence in the Chinese market. A total of 30 foreign currency funds completed new rounds of fundraising in the first half of 2022, with a total of 46.7 billion yuan, according to investment data provider PEDATA.

Vertex Holdings, a Singapore-based venture capital investment company, said in October that its fifth-phase dollar fund raised $500 million, and more than 90 percent of the fund will be invested in China.

Sequoia Capital China raised a total of nearly $9 billion for four new funds, Reuters reported in July.

The fundraising by Sequoia China was 50 percent oversubscribed and attracted commitments from investors in the US, Europe, the Middle East and Asia, underscoring global investors' confidence in China's new industries and technology sector, according to the report.

"The Chinese government's commitment to further reform and opening-up, the abundant and cost-effective finance-sector human resources, coupled with the growth and resilience of the Chinese economy and high-end consumption, all these make China an excellent destination for foreign investment," Chen said.

As China is set to become the world's largest consumer market, it will be more and more highly valued by foreign companies and overseas investors, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Tuesday.

"With the deepening of the two-way opening of China's capital market, more foreign capital will enter through public or private funds. 

"This will expand the sources of long-term capital in the market and improve the investor structure," Dong said.