carlyle: Carlyle set to acquire VLCC Healthcare

Private equity group Carlyle is set to buy VLCC Healthcare Ltd, a three-decade-old local wellness, beauty and personal care company, making a big play in the fast-growing and trending sector that has seen several young, direct Proliferation of brands directed to the consumer (D2C).

The buyout group is looking to take a 60-70% stake for around ₹2,000-2,500 crore ($250-300 million) through a primary infusion and a secondary purchase of shares from the founding Luthra family, people told The Associated Press. so much. A formal announcement is expected in the coming weeks.

Globally, Carlyle has spent $25 billion on 135 consumer, retail and media investments.

Businesswoman Vandana Luthra and her husband Mukesh Luthra own 95% of VLCC Health Care; the remaining 5% is with employees and others. The Luthras will continue to invest, but Carlyle is expected to bring in a new management team to boost the business.

Started as a weight loss company, it has transformed over the years into a beauty and personal care business. Beauty and skin care represent 70% of the business. More than half of annual sales come from face washes, serums, vitamin C creams, face masks, sunscreens, body creams, shampoos, oils, henna, ahead of wellness and beauty service centers. The contribution of sales from e-commerce channels has doubled to 35-40% in the last three years. These include outlets like Flipkart, Amazon, Nykaa and specialist outlets like Apollo Pharmacy or Wellness Forever, as well as their own website.

Having started in New Delhi, the company now has operations in 13 countries, with factories in Haridwar, Assam and Singapore. The company directly manages operations in Singapore, Thailand, Kuwait, Qatar, Kenya, Bahrain, Sri Lanka, Bangladesh and Nepal. It entered into a strategic partnership with Thailand-based Minor Hotels group at the end of 2019 to establish health, wellness and beauty clinics in Southeast Asia. The company’s acquisitions include Wellscience and Vanity Cube, which operate in the nutraceutical and beauty-on-demand business spaces, respectively.

In FY21, VLCC Health Care reported a total revenue of ₹565 crore, with a net profit of ₹6.2 crore compared to a loss of ₹15.3 crore in the previous year, according to regulatory documents. For FY23, the company is expected to make close to 1 billion rupees in revenue and an EBITDA of 225 crores, people familiar with the matter said.

Carlyle did not respond to ET’s questions. VLCC Health Care President Mukesh Luthra could not be reached for comment.

“This is a profitable business with very high brand recall and gross margins of around 60-70%. You need to invest significantly in branding and sales, but still the Ebitda margin is over 20%. The family Luthra was unable to scale by leveraging its brand equity and pioneering advantage. Under PE ownership, that is expected to happen soon,” a Mumbai-based consultant said. “This is now a full-fledged wellness and beauty company. And consumer brands always attract a valuation premium in India.”

India’s beauty and personal care market is estimated at $24.53 billion and forecast to reach $33.33 billion by 2027, growing at a CAGR of 6.32%, research firm ResearchAndMarkets said. .com in a report.

VLCC has been planning an IPO for some time. ET reported on April 1 that it was working towards a public issue in the middle of the year and wanted to raise between Rs 850-900 crore, but this plan did not progress due to global market volatility. Also in 2015, the company submitted draft documents for a public listing and received approval, but later abandoned the plan. Over the years, CLSA and Everstone have been investors in the company, but sold their 15% stake to developers with little return on investment.

Carlyle has been supporting consumer brands around the world. Last year, he bought a majority stake in Beautycounter, a clean beauty specialist, at a $1 billion valuation. Its consumer, retail and media portfolio includes Hunkemoller, McDonald’s China, Compana Pet Brands, A Twosome Place, Accolade Wines, among others. Amit Jain, managing director and co-director of Carlyle India Advisors, had previously backed Gujarat-based tiles company Varmora Granite.

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