Carlyle Fund to buy majority stake in VLCC

Carlyle buys majority stake in VLCC
Carlyle buys majority stake in VLCC

Indian Market
by 5paisa Research Team Last Updated: 2023-01-11T15:57:51+05:30

Just about a year ago, VLCC was one of the prime and high profile candidates to tap the IPO markets. VLCC has already made several attempts to come out with a public issue but has never been too satisfied either with the valuations or with the state of the markets. Finally, they have decided to sell a majority stake in VLCC to private equity investor, Carlyle Group. Now it has been confirmed that the private-equity outfit, Carlyle Group, has acquired a majority stake in VLCC, the Indian beauty care and wellness solutions provider, for a consideration close to $300 million. These are purely based on Reuters reports and the deal or the size of the deal has not been confirmed, either by Carlyle or by VLCC.

However, Carlyle did issue a vert terse statement stating that the equity for the transaction will come from funds managed and advised by entities affiliated with Carlyle Asia Partners. The Carlyle statement did not divulge any details about the size of the deal and the consideration paid or the valuation at which the deal was done. VLCC has been an established beauty and wellness service provider, catering principally to the middle and upper middle segment of the Indian market. VLCC currently has a network of 210 clinics spread across 118 cities and encompassing over 11 countries. Its predominant coverage is in South Asia, the Middle East and in Africa.

The beauty and wellness business is also gradually going the digital way with consultancy sessions and product delivery being done online to the extent possible. Most of these beauty clinics are looking at a model wherein they can achieve much better business traction without too much of additional investment in the core business. In other words, such businesses do look at growing in a lateral way without having to add too much to the infrastructure. That is where VLCC reporting a rise in the share of online sales from 7% of total sales to 22% of total sales in the last 3 years, comes in handy. It gives the beauty products brand a very distinct value proposition for the future.

VLCC was founded in the year 1989 by Vandana Luthra and Mukesh Luthra. The couple continues to hold a very significant stake in the company, which would now be diluted as Carlyle takes a majority stake in VLCC. But the real kicker for this industry is the rapid growth in the Indian beauty and personal care industry which is expected to grow to $27.5 billion by the year 2025 from $17.8 billion in 2020. This is based on a report put out by Avendus. One thing Carlyle and VLCC would be looking out for is the valuation metrics of Mamaearth, which has for an IPO offering. That could set the template for the beauty and wellness business in India in the future.

With Carlyle coming in, VLCC may not look at a public sale immediately. Hopefully, the institutional backing should allow the company to get a much better valuation, giving them a much better value in the future. For now, the deal is done and it is just the granular details that are yet to come out.


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