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Wednesday, June 19, 2024

PE group Carlyle set to acquire VLCC Healthcare

Carlyle, a private equity group, is going to acquire VLCC Healthcare Ltd. The buyout firm hopes to acquire a 60-70% controlling share for $250-300 million.

Private equity group, Carlyle, is in talks to acquire a  health, beauty goods, and personal care firm, VLCC Healthcare Ltd. With this, Carlyle is making a huge bet in a fast-growing and trending industry that has recently seen numerous new, direct-to-consumer (D2C) companies blossom.

According to sources, the buyout company is trying to grab a 60-70% controlling position for roughly $250-300 million through a main injection as well as a secondary acquisition of shares from the foundingLuthrafamily. In the next weeks, an official announcement is planned.

Carlyle has spent $25 billion on 135 consumer, retail, and media projects worldwide.  Vandana Luthra and her husband Mukesh Luthra hold 95% of VLCC Health Care, with the remaining 5% owned by workers and others. The Luthras will remain involved, but Carlyle is likely to bring in a new management team to help the company grow.

It began as a weight-loss firm and has now evolved into a beauty and personal care branded business. Beauty and skincare account for 70% of total revenue. Face washes, serums, vitamin C cream, face packs, sunscreens, body butters, shampoos, oils, and henna account for more than half of yearly sales, ahead of health and beauty service centers.

In the previous three fiscal years, the percentage of sales through ecommerce channels has more than quadrupled to 35-40%.  These include Flipkart, Amazon, Nykaa, and specialized retailers such as Apollo Pharmacy or Wellness Forever, in addition to its own website.

The firm, which began in New Delhi, currently has operations in 13 countries, with plants in Singapore Haridwar, and Assam. Several countries including Singapore, Thailand, Kuwait, Qatar, Kenya, Bahrain, Sri Lanka, Bangladesh, and Nepal are all managed directly by the corporation. In late 2019, it announced a strategic alliance with the $4 billion Thailand-based Minor Hotels business to establish healthcare, wellness, and beauty clinics throughout Southeast Asia.

Wellscience and Vanity Cube, which operate in the nutraceuticals and on-demand beauty services industries, are two of the company’s acquisitions.

According to regulatory filings, VLCC Health Care recorded total income of Rs 565 crore in FY21, with a net profit of Rs 6.2 crore, compared to a deficit of Rs 15.3 crore the previous year.

According to persons familiar with the situation, the firm is likely to produce close to Rs 1,000 crore in sales and Rs 225 crore in ebitda in FY23.

A Mumbai-based consultant said,  “This is a successful firm with extremely strong brand recall and gross margins of roughly 60-70%.   Even with large investments in brand creation and sales, the ebitda margin is 20% or higher. The Luthra family was unable to scale up due to its brand value and early mover advantage. That is predicted to happen shortly under PE control. This is now a full-fledged wellness and beauty business. And consumer brands always command a premium in India.”

Carlyle, which manages over $376 billion in assets, has invested in consumer brands all around the world. The group paid $1 billion for a majority share in a clean beauty expert, Beautycounter, in 2021.

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