LVMH'S Acquisition Of GXG'S 70% Equity Valuation Is Different Now.

After the failure of the acquisition negotiations with Semir costumes in 2013, 2 years later, GXG, a high-end leisure menswear brand and its parent company zhe Mu Shang, seemed to have found a bigger backing, but its valuation is different now.

Foreign media reported that L Capital Asia, a private Holdings Company of LVMH, the world's largest luxury group, is seeking a five year installment loan of US $130 million (about 832 million yuan) to raise funds for the acquisition of a 70% stake in a Chinese GXG menswear brand.

The GXG management team will retain 30% of the company's remaining equity.

It is worth noting that if the takeover is successful, the price is far lower than the price of the 71% stake acquired by Semir about 2 billion of the year. Why is GXG willing to accept a more undervalued L Capital Asia after 2 years, and mainly invest in L Capital Asia as a minority shareholder?

Founded in the late 1970s, GXG was founded by Gill and Green two brothers, a joint venture with Hongkong silver Boxing investment company, Ningbo Hejie Costa Clothing Co., Ltd., to promote its brand in mainland China. Its competitors include men's clothing brands such as Pacific bird and CABBEEN.

A person familiar with the matter told reporters, "GXG brand was very popular in the past few years, similar to Taiping bird and CABBEEN, but in recent years, as the overall situation of the clothing industry is not good, the growth rate has also slowed down.

GXG's core management team includes designers from Taiping bird.

It is reported that GXG brand menswear is distributed through more than 1000 stores and online stores in China. Publicly available data show that zhe mu of its parent company has earned 1 billion 398 million yuan in 2012 and net profit of 206 million yuan, an increase of 40%~50% over the same period last year.

It is estimated that GXG will earn 90 million yuan (about 576 million yuan) this year.

Prior to that, GXG was also the object of Semir clothing coveted purchase. In June 2013, Semir apparel announced the "major issues": it intends to buy 71% of the high-end leisure men's brand GXG in Ningbo by 1 billion 980 million yuan ~22.6 billion.

But zhe Zai still has a valuation of about 3 billion yuan, far higher than the purchase price.

Price differences led to the failure of the two ultimately.

On the other hand, "at that time, the valuation of CABBEEN in Hong Kong stock was about 1 billion. We feel that Semir bought GXG at such a price, which is a bit high, so Semir's share price continued to fall after the announcement of the takeover."

A brokerage garment industry analyst told reporters.

Changes in the development of men's clothing industry also affect GXG valuation changes, Beijing Zhi future marketing advisory group chairman Li Zhiqi told reporters analysis, "nearly 2 years of clothing industry is also in the depth of adjustment, the growth of men's clothing industry is slowing down, so GXG valuation decline is not surprising, for L Capital Asia at this time is also a good time to buy."

The person familiar with the matter also revealed to reporters that

The majority shareholder is the investor, the minority shareholder is the management level, after the Semir acquisition negotiated, the big stockholder also has been seeking the sale.

He judged, "after being acquired by L Capital Asia, GXG can benefit from the influence of LVMH group such an international luxury group on the one hand, and on the other hand, it can also be complemented and promoted in channels, marketing and other aspects."

The acquisition of GXG menswear brand will be another new investment action of L Capital Asia in China this year.

In January 23, 2015, one of the largest orlis development and operators in China, the sand boat group (hereinafter referred to as the "sand boat"), announced that L Capital Asia would invest in the sand boat leader and acquire an important minority stake in the company.

In addition, L Capital Asia has invested in China in recent years.

Including the JORYA brand parent company Xin He company, the European time parent company, Heji international group and so on, holding the 10%~20% shares of these companies respectively. In addition, in 2013, they invested in Guangdong beauty cosmetics brand beauty, holding a proportion of 49%.

L Capital Asia said it mainly invested in minority shareholders but could selectively absorb most of the shares.

Compared with the minority interests of investment sand boat, bolus, Hsing Ho and Hechi International Group, why did the L Capital Asia seek to hold the GXG of this acquisition unusually? Beijing Zhi Chi Li, the chairman of the future marketing consultancy group, analyzed the "First Financial Daily". "The competition law of women's clothing industry is still catching up with fashion. This part of the advantage is still abroad. The gold content of Chinese local dress brands is limited, while the trend of high-end men's clothing is customization and individuation. In recent years, GXG has accumulated some difficulties in China's consumption data, which is one of its most valuable places."

In addition to finding L Capital Asia through its fund

New opportunities, LVMH group itself is constantly buying.

LVMH group has announced that it will hold a minority stake in the 90 year old Italy jewelry brand Repossi and will help Repossi brand develop its sales network.

In 2011, LVMH group also bought Bvlgari (Bvlgari) at a high price of 6 billion US dollars.

Founded in 2009, L Capital Asia has beauty and health care, fashion, leather goods and accessories, media and entertainment, boutique and distribution, watch and jewelry, lifestyle and casual dining.

It claims that the unique relationship between the company and LVMH has enabled it to successfully implement a private equity led growth strategy in Asia, which is independent of LVMH in management, but has a strong alliance of interests through the sponsors' commitment.

LVMH and L Capital Asia achieve mutual benefit by expanding the network and providing free information.

Since 2002, LVMH has invested and managed third party funds in the form of private equity investment in the sponsorship mode.

LVMH has sponsored three independent private equity firms, each of which is owned by LVMH.

In addition to L Capital Asia, the other two enterprises include L Capital (Europe) and L Real Estate.

For investment preferences, L Capital Asia said, "the companies we are looking for provide strong support for the companies in their field, and the companies usually look for more than $1 billion.

Although we are not opposed to looking for listed companies, we still prefer to cooperate with unlisted companies through the investment time limit of 3 to 5 years.

Investment is mainly targeted at the Asian region, and will only be carried out at the critical stage of the development of the company: expansion of product scope and / or strengthening of internal operations, expansion of brands and / or expansion of distribution networks, and the launching of international expansion.