Louis Vuitton keen to invest in Patanjali; Balkrishna not averse
11 January 2018
French luxury group LVMH Moët Hennessy Louis Vuitton SE, known for the Louis Vuitton luxury brand, is interested in buying stakes in Baba Ramdev's Patanjali Ayurved, reports The Economic Times.
With Patanjali making a point of being indigenous and bashing multinationals, it would be interesting to see if such a deal works out.
"We would love to work with him if we can find a model," L Catterton Asia managing partner Ravi Thakran told the paper. L Catterton is a private equity fund co-owned by LVMH.
"I know his model is not to work with multinationals and with foreign money," Thakran added.
The report says they are ready to put in $500 million, which is close to half of their available funds in Asia, to buy stakes of Patanjali.
Patanjali has emerged to be one of the fastest growing FMCGs by attaching the 'Swadeshi' label on their products. In order to compete with Patanjali, Hindustan Unilever, Colgate Palmolive and Dabur were forced to recreate and ramp up their ayurvedic products.
"Patanjali has the potential to go to the world and I can tell you today that Patanjali has been a disruptor in its category, as strong a disruptor as many of the global disruptors are and it has taken Indian-ness and celebrated it with pride," Thakran told the paper. He said L Catterton can help Patanjali go international and expand its markets in US, Japan, China, South Korea and Europe.
Even though Patanjali is seeking funding, the offer from Louis Vuitton may not work out as Patanjali's front man Baba Ramdev has always portrayed his brand as anti-multinational.
Patanjali chief executive Acharaya Balkrishna said the company isn't looking to dilute equity but is seeking about Rs5,000 crore in loans in "Indian currency" at rates that are lower than those offered by banks. He said UBS has lined up meetings with several foreign investors to this end. "We will not give stake to anyone," he said.
But Balkrishna told ET over the phone he is ready to talk to L Catterton.
"The world moves with help from one another and if somebody wants to help us then it has to be within the radius of our conditions," he said. "We won't accept any money in equity or shares but when the country is using foreign technology for progress and if foreign money comes and gives us on our conditions we will accept."
Thakran said Patanjali's current valuation could be at least $5 billion, adding that L Catterton could help the company build its brand outside India.
"I would welcome a chance to meet Baba Ramdev and tell him this is a case of not just being an Indian leader but a global leader. This company genuinely has a chance," Thakran said. "They maybe per se against multinationals encroaching into their lives, and therefore their theme to go Indian is a great one."
But they may not be averse to seek help from great brand builders to build their brand better and to tell the story better and we want to celebrate the same Indian-ness better. It would be great to find a marriage."
Balkrishna said the company is in immediate need of Rs5,000 crore to set up plants in Nagpur, Greater Noida, Assam, Chhattisgarh, Andhra Pradesh, Telangana, Haryana and Rajasthan and for the cultivation of aromatic and herbal plants on 10,000 acres of leased land in Arunachal Pradesh.
"We are getting loans from the banks without any problems. My condition is that if any fund is looking to support us, they should give us loans with interest lower than the banks and in Indian currency," he said.
"There are lots of people lined up for stake purchase. I won't say hundred but I have already met dozens of potential investors."
L Catterton Asia has a corpus of $1.25 billion and the company generally invests in the range of $100-200 million per company but is prepared to bet as much as $500 million on Patanjali, the ET report says.