LUXURY MARKET, INVESTMENT OPPORTUNITIES & TRENDS BETWEEN EUROPE & ASIA - Fabrice LOMBARDO, Founder & CEO
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LUXURY MARKET, INVESTMENT OPPORTUNITIES & TRENDS
BETWEEN EUROPE & ASIA
Monday 14 April 2014
RHT Academy, Singapore
Fabrice LOMBARDO, Founder & CEO
LUXURY MARKET , KEY FACTS & FIGURES
BEST AIRLINES ARE ASIAN
According to World Airlines Awards,
6 of the top 10 best airlines are Asian
3
Singapore Airlines Suites, N1 worldwide
Other top Asian Airlines: ANA All Nipon (Japan), Asiana Airlines (South Korea), Cathay Pacific (Hong Kong),
Thai Airline (Thailand), Malaysia Airlines
Source: World Airlines Awards, Business Insider
HIGH-END HOTEL BOOM IS IN ASIA
Since 2014, there are more Starwood hotels on China’s Hainan Island than in the
Hawaiian Islands
4
Mandarin Oriental, Hainan, China
Sources: GCF Research & Analysis, Top hotels analytics
UNIQUE ARCHITECTURAL EXPERIENCE ARE IN ASIA
2011 Design Award for the Marina Bay Sand in Singapore
with 2,560 hotel rooms, 74 000 m² of retail arcade, & a 150 m outdoor pool
5
Source: Design Awards
UNIQUE RETAIL EXPRESSION IS IN ASIA (1/2)
LOUIS VUITTON opened its first “Maison” in mainland China in
Shanghai on July 2012
6
Louis Vuitton Singapore, opened in 2011 Louis Vuitton Shanghai, opened in 2012
UNIQUE RETAIL EXPRESSION IS IN ASIA (2/2)
7 of the 10 largest shopping malls in the world
are in Asia!
7
Hanjie Wanda Square shopping mall, Wuhan, China
GROWING TREND OF EURO-ASIAN BRANDS
AKAR DE NISSIM, Luxury furniture & accessories
Asian Lifestyle by French design
8
Source: GCF Research & Analysis
GROWING TREND OF ASIAN SUCCESSFUL BRANDS
First Chinese brand to be invited to the highly prestigious Antique Dealers
Biennial in Paris: WALLACE CHAN brand
9
Fine Jewellery Designer:
Wallace CHAN
Source: GCF Research & Analysis, The Jewellery editor
GROWING TREND OF EURO-ASIAN BRANDS
Luxury Timepieces designed by Asian founders
& manufactured in Switzerland, center for the finest Watchmaking
10
Source: GCF Research & AnalysisGROWING TREND OF ASIAN SUCCESSFUL BRANDS
HERBORIST: The first Chinese Cosmetics brand to succeed in Asia & in Europe,
Reviving the Chinese medical herb culture in 250 European points of sale
11
Source: GCF Research & AnalysisCHINA IS A LUXURY « GIANT »
China (Mainland + HK) overtook France, the UK, Italy and Japan
as the 2nd biggest luxury market in the world after the US
Personal Luxury Goods Ranking by Area in 2013e
EUR Bn Growth 2012-2013e
70 15%
10%
60 10%
12
50 4% 4% 4% 5%
3% 5%
3%
1%
40
-2% 0%
30 62,5
-12% -5%
20
10 -10%
17,2 16,1 15,3 15,1 12,1 9,9 8,3 7,7 5,8
0 -15%
US Japan Italy China France UK Germany Korea Hong Russia
Kong
q 2013 Chinese consumers accounted for 30% of global luxury market (vs 20% in 2012)
Source: Bain & Co.TOP EDUCATION DESTINATIONS
80% of Asian Parents wish to send their children study overseas
Top Education Destinations
50%
40%
30%
13
20%
10%
0%
q US and UK are the top 2 favourite education destinations
q Switzerland is the fastest grower
Source: HUNRUN Research 2014WINGS & WATER
Today, 300 jets and 200 luxury yachts in Greater China
Expect to grow to 500 within 5 years
14
GULFSTREAM BOMBARDIER DASSAULT
SUNSEEKER AZIMUT
Source: HUNRUN Research 2014CHINA: WORLD N1 FOR SELF-MADE MILLIONAIRES
Known Wealth in 2013:
Globally: 1.867 USD Billionaires
(+28 % vs 2012)
China: 358 USD Billionaires
(+36 % vs 2012)
15
Hidden Wealth:
Globally: 4000 USD Billionaires
China: 700 USD Billionaires
q Size of market
§ USD billionaires globally: 4500 pax 63 years
§ USD billionaires China: 750 pax 53 years
§ Dollar millionaires: 2,8 M pax 39 years
Source: HUNRUN Research 2014WHERE MILLIONAIRES IN DOLLARS CHOOSE TO LIVE
41% live in 1st tier cities (Beijing, Shanghai, Guangzhou and Shenzhen)
33% live in 2nd tier cities
Geographical Distribution By City Geographical Distribution By
200000 Region
150000 South Others 16
China 16%
17%
100000 East
China
43%
50000
North
0 China
24%
Source: HUNRUN Research 2014TOP TRAVEL DESTINATIONS
Average travel duration: 7,5 days/month for millionaires
2 to 3 trips overseas a year
2013 2012
1 Australia ↑ 1 France
2 France 2 US
17
3 Dubai ↑ 3 Singapore
4 Switzerland 4 Switzerland
5 Maldives ↑ 5 UK
6 US 6 Italy
7 Japan 7 Australia
8 Germany ↑ 8 Dubai
9 Singapore 9 Germany
10 New Zealand 10 Maldives
Source: HUNRUN Research 2014FROM ULTRA TO AFFORDABLE LUXURY
The slow down of high end luxury will continue in 2014, but affordable luxury is
the growing segment.
China luxury market by category (2012)
100% Accessories
90% Women's wear
Shoes
80%
Jewellery
70% Menswear
60%
Leather goods 18
50%
Cosmetics,
40% Perfume &
Personal Care
30%
20%
Watches
10%
0%
China Mainland
q Since Oct 2012: new gifts regulation à - 25% spending in High end Luxury gifts
§ Red wine & watches are gifts of choice within RMB 20 thousands an item
§ Travel vouchers & healthcare products are fastest growing gifting categories
Source: Bain & Co. GreenbookLUXURY MARKET , THE KEY DRIVERS
CUSTOMERS TARGETED – HNWI*
+9,4% HNWI in Asia - Pacific (~3,7M) in 2012 vs +7,5% in Europe (3,4 M)
Emerging Asian HNWI asset growth = +13% CAGR 2012-2016
Global HNWI in 2012
Historical Vs. Forecast CAGR
AuM
Historical
CAGR
(2007-‐2016)
25%
China
20% Emerging Asia 1,1 M
0,8 M India
15%
0,2 M 20
USA
10% Europe 5,2 M Latin America
Japan 3,3 M 0,6 M
5% 1,5 M MEA
0,5 M
0%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
-5%
Asset under Management Forecast CAGR (2012 – 2016)
q Wealth of HNWI in Asia Pacific = +33% between 2012 and 2015 (from USD 12 T to 16 T)
§ China will contribute to 60% of the growth in wealth from 2011-2016
§ Asian tourists account for between 35 and 60% of luxury sales in Europe
q European brands = 70% of the global luxury goods markets
§ Among the top 25 worldwide luxury brands, 18 are from Europe (mainly France & Italy)
HNWI = High Net Worth Individual ; assets > USD 1 M
Source: GCF Research & Analysis, Asia Pacific Wealth Report 2013, World Federation of Exchange, World Wealth Report 2013HOUSEHOLD SPENDING POWER IN MEGACITIES*
Main cities in booming Markets are catching up in household spending power
Middle Income Households in China and India x4 between 2011-2025
Number of households (in Mn) with annual incomes >EUR 15 K**
in megacities in 2011 & 2025e
China: Beijing, Shanghai 16,1
3,3
India: Dehli, Mumbai, Kolkata 8,0
2,3 21
France: Paris 6,1
5,2
Germany: Rhein-Ruhr 5,9
5,2
0 5 10 15 20
2025e 2011
q China : Rising Middle Class influence → Market opportunity for Affordable luxury
§ Chinese Middle class growth fast: 2/3 of population in 2012, 3/4 of population in 2022
§ Amount urban households, upper middle-class (incomes of $16-34K) will growth from
14% in 2002 to 54% in 2022
§ Sophistication of the population: 34% have bachelor degree & 24% speak English
* Megacity: Population > 10 Mn
** In PPP term
Source: GCF Research & Analysis, McKinsey, Morgan Stanley, The DiplomatRISING HOUSEHOLD SPENDING IN CHINA
Shanghai & Beijing will have about 16 M middle income households
(>USD 20K/y) in 2025: x5 vs 2011
22
Source: GCF Research & Analysis, The DiplomatTHE M&A TRENDS
COMPARABLE MULTIPLES
*Figures: 2014 April LTM
Turnover EBITDA EV* EV/ EV/
Business Turnover* EV/
Company Growth Margin* (Bn EBITDA* EBITDA
Overview (Bn EUR) Sales*
(%) (%) EUR) 2013 2012
LVMH Apparel, Accessories
29 0,34% 24% 71 2,4x 12,2x 10,9x
(FRA) & Luxury goods
L’OREAL
Cosmetics 23 2,4% 21% 68 3,2x 16x 13,5x
(FRA)
RICHEMONT Apparel, Accessories
13,4 29,% 27% 49 3,7x 13,5x 11,1x
(SWITZ) & Luxury goods
KERING Apparel, Accessories
9,7 0,1% 26% 30 2,2x 10,5x 11,8x
(FRA) & Luxury goods
ESTEE LAUDER High end
10,4 31,5% 18% 26 2,5x 13,6x 12,5x
(USA) Cosmetics
LUXOTTICA Apparel, Accessories 24
9,5 29,7% 20% 29 3,0x 15,3x 14,8x
(ITA) & Luxury goods
RALPH LAUREN Apparel, Accessories
7,2 36,4% 18% 13 1,8x 9,74x 10,6x
(USA) & Luxury goods
HERMES Apparel, Accessories
3,8 1,4% 37% 25 6,8x 20,6x 18,2x
(FRA) & Luxury goods
PRADA Apparel, Accessories
4,6 32,6% 33% 19 4,2x 13,2x 16,6x
(ITA) & Luxury goods
TIFFANY
Fine Jewellery 4,0 33,3% 23% 12 2,9x 12,2x 10,1x
(USA)
q Leading Luxury players are US & Europe based
q Average +6,3% growth of 2013 EV/EBITDA multiples vs. 2012
q Luxury global market to outperform global market:
§ S&P 5-year annual return of the top 80 top Luxury companies: +29%
§ vs. 12% the Global general Market (S&P 1200) & vs. +16% in Global F&B Market
Source: GCF Research & Analysis, Factset, S&P, Yahoo FInanceTRANSACTION MULTIPLES
Deal
Stake Sales EBITDA EV/
Date Acquirer Target Description Value
(%) (M EUR) Margin EBITDA
(M EUR)
Cosmetics,
Jan L'OREAL MAGIC HOLDINGS
skincare and 620 100,0% 160 15,3% 3,8x
2014 (FRA) (Hong Kong)
facial masks
Apparel,
Aug LVMH LORO PIANA
accessories and 2 000 80,0% 490 20,0% 25,5x
2013 (FRA) (ITA)
luxury goods
SICHUAN LESSIN
May FEDONE Cashmere
DPT STORES 8,5 1,8% 280 15% 11,2x
2013 (ITA) maker
(China)
Apr KERING POMELLATO
Fine jewellery 300 81% 146 17% 15x
2013 (FRA) (ITA)
25
q Consolidation trend: individual brands are bought up by large luxury groups
§ Luxury brands owned by entrepreneur / family = 30% in 2011 vs 70% in 1995
q As of S1 2013: 31 deals worth ~EUR 750 M globally in the luxury sector
§ vs. 52 deals worth EUR 1,2 Bn on all of 2012
§ 20% of these 31 deals are Asian (vs. 15% in 2012)
Source: GCF Research & Analysis, Mergermarkets, Forbes, Capital IQ, Comité ColbertASIA TO EUROPE M&A DEALS BOOM
Asian growing appetite for luxury western brands (50% of luxury total revenue
expected in 2025) coupled with the critical need for European luxury brands
to enter the fast growing Asian markets offers strong potential synergies.
26
June 2013 May 2013 May 2013
SUNSEEKER (UK) acquired CLUB MED (CN)) acquired CORUM (CH)) acquired
by DALIAN WANDA (CN) by FOSUN (CN) by FCHINA HAIDIAN (CN)
April 2012
Feb 2013 2007 GIVES & HAWKES (UK)
SONIA RYKIEL (FR) acquired by MG (UK) acquired by
acquired by TRINITY (HK)
FUNG BRANDS (HK) SAIC MOTOR (CN)
Source: GCF Research & Analysis,FRAGMENTED & REGIONAL INDUSTRY
In France, the luxury industry employs more than 200,000 people in
more than 40,000 companies
Key luxury manufacturers and subcontractors in France
27
Source: GCF Research & Analysis, Comité Colbert/BCGASIAN APPETITE FOR EXCEPTIONAL WINE ESTATES
Since 2008: >30 French Chateaux acquired by Chinese investors
& ~ 20 deals are currently in the pipeline
q Château de Gevrey-Chambertain (Bourgogne)
§ Estimated price before transaction:
~EUR 3,5M (castle + 2 Ha of vineyards)
§ Purchase price in August 2012
EUR 8M (~EUR 4M/Ha) + 130% 28
Gevrey-Chambertain
q Château Les Carmes Haut Brion (Bordeaux)
§ Estimated price before transaction:
~EUR 10M (castle + 5 Ha of vineyards)
§ Purchase price in January 2011
EUR 18M (~EUR 3M/Ha) + 80%
Les Carmes Haut Brion
Source: GCF Research & Analysis, BBCABOUT GEREJE Corporate Finance
We are a Euro-Asian M&A firm with a “boutique” culture providing
both strategic and financial advisory services ensuring
excellence of execution thanks to our 100% in house offices and team
Origination & Execution
§ Paris
§ Singapore
29
Origination
§ Bangkok, Berlin
§ Shanghai, Mumbai
25 multi-cultural professionals between Europe and Asia acting as a “single” team
§ 7 Management Committee members leading the company
§ 10 Research & Analysis team members & 8 Senior Advisors bringing sector, country and
financial expertiseOUR CROSS BORDER TEAM
Fabrice LOMBARDO Founder & CEO, based in Paris
§ 20 years’ cross border experience working with Asia (ASEAN, India, China)
§ Passionate entrepreuneur, he founded GEREJE in 2007 at 35 years old
§ Specific expertise in the Buy side / Joint Venture and Fund Raising transactions
between Europe & Asia
§ Advised both corporates (small, mid cap and MNCs such as BEL, DANONE or
LACTALIS) as well as financial investors (family offices, HNWI or PE funds)
§ External teacher at ESSEC
§ BBA at Oxford Brookes Univ, Grenoble Business School, Exec MBA at ESSEC
30
Thierry SMADJA Managing Director & Co-Founder, based in Singapore
§ 20 years’ experience in finance and industry
§ Started in the M&A industry in the mid 90's US by managing the sale process of
a OEM multinational manufacturing group to a NYSE listed company
§ Managed a Swiss Family Office active in private equity activities and lead
several transactions of various sizes and industry sectors.
§ Executive & Shareholder in an ASEAN cosmetics and fragrances distribution
group. Joined GEREJE in 2011 post divestment of this investment
§ IBA in Business Administration from the American University of ParisOUR TEAM
Stéphane ILIADES, Senior Partner Pisit JEUNGPRADITPHAN, Senior Advisor
§ 20 years’ experience in Bus Dev. § Specific expertise in sell-side transactions
§ Ex MD of DANONE in India and ex VP § President of CFA Society in Thailand
International for SPOTLESS
§ Trade Advisor to the French government.
§ MBA, INSEAD.
Pierre-André MONTJOVET, Senior Advisor Paul VALIN, Associate Partner
31
§ 11 years’ international experience in M&A § 7 years’ experience in cross border M&A
between Europe and Asia.
§ Former Manager at ADM, notably in charge of
M&A and Strategy
§ Co-leader of a team of 10 analysts across
Asia & Europe.
§ Bus. Dev. Director for MOD-ELEC, French
high-end electrical appliances producer & § MSc in Corporate Finance & Financial
Former Bus Dev director-Perle Noire (caviar) Engineering, Paris Dauphine.
§ MS in Mech. Eng. & Auditor of the CHEDE
Antoine ALEMANY, Associate Partner Anil RAI, Junior Partner
§ 7 years’ experience in cross border M&A § 4 years’ experience in cross border M&A
between Europe and Asia.
between Europe and Asia
§ Co-leader of a team of 10 analysts across
Asia & Europe. § BBA in Finance, NTU, Singapore
§ MSc in Management, ESCEM Business
School.OUR PROPRIETARY DATABASES OF INVESTORS
We have a direct access and strong relationships with 500+ Private Equity
funds, 100+ Family offices and 200+ Private Investors / HNWI
Geographical split Typology
32
W. Europe Others
17% ASEAN HNWI 2%
21% 24%
China PE Funds
France
13% 55%
37% Family Offices
Others Asia 14%
13%OUR PROPRIETARY DATABASES OF CORPORATES
We have established direct and privileged relationships with 6,500+ companies
(small, mid cap, MNCs) in Europe and Emerging Asia including 350+ in the
luxury industry only
Geographical split Sectors split
Industry &
Cleantech
W. Europe NewTech 15%
ASEAN
14% 5%
38%
33
France Health & Beauty
33% China India 40% F&B
8% 8% 40%
q Direct access to key shareholders/management of luxury companies mainly in:
§ Wine & Fine Foods:
§ Jewelry & Haute Horlogerie
§ Cosmetics & Fragrances
§ Apparels, Furniture & Accessories…34
The information contained in the presentation has been provided collated from publicly available sources or other sources that GCF
DISCLAIMERS (GEREJE CORPORATE FINANCE) deems reliable. GCF makes no representation warranty or undertaking, express or implied, and
consequently shall not accept any responsibility of any kind whatsoever with respect to the accuracy or completeness of the
Information and / or the information contained in it or any further information applied in connection with the matters described in it.
This presentation is being distributed solely for the benefit of the persons to whom it is distributed. Consequently, it shall not be shown
or given to, copied by or discussed by, in whole or in part, with any other person without the prior written approval of GCF. This
Presentation may not be photocopied, reproduced or distributed to others at any time without the prior written consent of GCF.
GCF designate the companies, whilst legally they are independent entities, sharing GEREJE corporate identity, logo, documents,
working methodology & ethical rules.
All GCF offices are working as an integrated group of companies under the governance of an exclusive agreement for the interest of
the clients. GCF offices are privately owned and independent structures. GEREJE Advisory Asia Pte Ltd Singapore is formerly known
as “Arpels” Advisory Pte ltd.
GCF solely offers advisory services in connection with corporate financial transactions or evaluations. In no way whatsoever does GCF
itself underwrite, acquire or place any securities, or lend any sums or hold funds on behalf of its clients.
GEREJE Advisory Asia & GEREJE Corporate Finance are registered companies with MAS (Monetary Authority of Singapore) and AMF
(The France Financial Markets Authority) - ORIAS n° 13004146 – Member of ACIFTE as Conseil en Investissement Financier
(Financial Investment Adviser)
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