Mumbai: Global private equity firm L Catterton’s India pool of capital, led by former Hindustan Unilever (HUL) chief Sanjiv Mehta, is eyeing more proprietary deals in the country after deploying over $100 million across companies like Farmley, Haldiram’s and Healing Hands Clinic over the last year.
“Our deals are primarily proprietary in nature, and we don’t take part in intense bidding processes. This preferential access allows us to have better returns for our investors through better pricing discipline. The three deals we have completed so far have, on average, been 20–40% lower in terms of entry price versus market benchmarks, which again is an important driver of superior returns. On top of this, we help our entrepreneurs by leveraging our operating experience,” its partner Vikram Kumaraswamy said in a media roundtable on Tuesday.
Proprietary deals typically refer to transactions in which a buyer approaches a seller directly or through an intermediary before the business is marketed to others or placed in a competitive bidding process or auction.
The comments come after the firm raised nearly half of the $400 million target for its first India-focused consumer fund, which also has a green-shoe option of another $200 million. The firm expects to complete raising capital over the next 12-18 months and will target 7-9 investments with an average cheque size of about $50 million, said Kumaraswamy, adding that they also have the flexibility to do larger deals through co-investments.
Backed by French , L Catterton’s Asia (LCA) platform announced its joint venture with Mehta in 2024 to double down on its India presence. The fund has already attracted capital from global and domestic players. Mehta is also broadly involved in the firm’s other global fund platforms.
Scaling with economic discipline
Run by former Unilever executives, the investment firm targets businesses that follow three core principles: they must be differentiated in a structurally attractive category—which could mean brand or product-led or have a unique mode of distribution—or those that are at the intersection of multiple reinforcing themes, as in the case of snacking brand Farmley. The third principle centres on companies that benefit from a level of founder-driven intensity.
“We intend to diversify across business models from distribution channels and geographies, to even products and services. We also cater to a wide spectrum of company profiles, ranging from heritage to new-age founders and from early ramp-up to IPO ready companies,” Kumaraswamy explained.
He emphasized that future deals may be driven by opportunities arising from the transition of unorganized sectors to organized ones and from unbranded to branded products. “Our investment opportunity isn’t restricted to what the current market is today.”
Mehta added that other segments, such as luxury, are likely to see an uptick in India. “If our target market is about 4% or 15 million households with purchasing power, this translates to roughly 60 million people. These are people who travel extensively.”
Historically, the pure purchase of luxury items within the country has been through people buying items from places like New York, Milan, Paris, London, and Dubai, he said. “But now, thanks to the Free Trade Agreements (FTAs) that India is entering, I believe this will facilitate the sale of luxury items in the country. Over the next 10-15 years, I would expect the to have firm roots,” Mehta explained.
Overcoming global scepticism
As the firm prepares to raise the remaining capital, Kumaraswamy expressed concerns that global limited partners have about the Indian markets. “There are concerns around valuations, and we also need to make global investors more aware of the growth potential in India.”
Other factors include the robustness of the public markets, exits and working with promoters. “The question around businesses not scaling up with good economics also keeps coming up. This happens when a lot of capital is put into a company, and they are under pressure to use it immediately,” Kumaraswamy said.
“In such cases, the desire for greater market share and scale takes precedence over everything, and they do not necessarily have the discipline and patience to do things in a way where revenue eventually leads to profit and cash. Therefore, we have many business models in the country today of reasonable scale which grow at 30-40%, but unfortunately, their margins don’t necessarily improve,” he added.
On exits, the firm has clear plans for one or more paths—either through an IPO or sale to a strategic investor or financial sponsor—at the time of the investment. Broadly, sales to strategic investors have been the most conducive option and a key source of exits for worldwide, as many consumer companies scale up through acquisitions, and many of those acquirers are the firm’s LPs.
Meanwhile, L Catterton has about $40 billion in assets under management across platforms such as private equity, credit, and real estate. Founded in 1989, the firm has made over 300 investments in some of the world’s most iconic consumer brands. Some of L Catterton’s other investments in India include Reliance Jio Infocomm, Sugar Cosmetics and Drools Pet Food.