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LUXURY MARKET, INVESTMENT OPPORTUNITIES & TRENDS
BETWEEN EUROPE & ASIA
LUXURY MARKET , KEY FACTS & FIGURES
3
According to World Airlines Awards,
6 of the top 10 best airlines are Asian
Source: World Airlines Awards, Business Insider
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
BEST AIRLINES ARE ASIAN
4
Since 2014, there are more Starwood hotels on China’s Hainan Island than in the
Hawaiian Islands
Mandarin Oriental, Hainan, China
Sources: GCF Research & Analysis, Top hotels analytics
HIGH-END HOTEL BOOM IS IN ASIA
5
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
Source: Design Awards
UNIQUE ARCHITECTURAL EXPERIENCE ARE IN ASIA
6
LOUIS VUITTON opened its first “Maison” in mainland China in
Shanghai on July 2012
Louis Vuitton Shanghai, opened in 2012 Louis Vuitton Singapore, opened in 2011
UNIQUE RETAIL EXPRESSION IS IN ASIA (1/2)
7
7 of the 10 largest shopping malls in the world
are in Asia!
Hanjie Wanda Square shopping mall, Wuhan, China
UNIQUE RETAIL EXPRESSION IS IN ASIA (2/2)
8
GROWING TREND OF EURO-ASIAN BRANDS
Source: GCF Research & Analysis
AKAR DE NISSIM, Luxury furniture & accessories
Asian Lifestyle by French design
9
GROWING TREND OF ASIAN SUCCESSFUL BRANDS
Source: GCF Research & Analysis, The Jewellery editor
First Chinese brand to be invited to the highly prestigious Antique Dealers
Biennial in Paris: WALLACE CHAN brand
Fine Jewellery Designer:
Wallace CHAN
10
GROWING TREND OF EURO-ASIAN BRANDS
Source: GCF Research & Analysis
Luxury Timepieces designed by Asian founders
& manufactured in Switzerland, center for the finest Watchmaking
11
GROWING TREND OF ASIAN SUCCESSFUL BRANDS
Source: GCF Research & Analysis
HERBORIST: The first Chinese Cosmetics brand to succeed in Asia & in Europe,
Reviving the Chinese medical herb culture in 250 European points of sale
12
CHINA IS A LUXURY « GIANT »
62,5
17,2 16,1 15,3 15,1 12,1 9,9 8,3 7,7 5,8
4%
-12%
-2%
4%
3% 4%
3%
1%
10%
5%
-15%
-10%
-5%
0%
5%
10%
15%
0
10
20
30
40
50
60
70
US Japan Italy China France UK Germany Korea HongKong
Russia
Personal Luxury Goods Ranking by Area in 2013e
EUR Bn Growth 2012-2013e
China (Mainland + HK) overtook France, the UK, Italy and Japan
as the 2nd biggest luxury market in the world after the US
Source: Bain & Co.
2013 Chinese consumers accounted for 30% of global luxury market (vs 20% in 2012)
13
TOP EDUCATION DESTINATIONS
80% of Asian Parents wish to send their children study overseas
0%
10%
20%
30%
40%
50%
Top Education Destinations
US and UK are the top 2 favourite education destinations
Switzerland is the fastest grower
Source: HUNRUN Research 2014
14
WINGS & WATER
Source: HUNRUN Research 2014
Today, 300 jets and 200 luxury yachts in Greater China
Expect to grow to 500 within 5 years
GULFSTREAM BOMBARDIER DASSAULT
SUNSEEKER AZIMUT
15
CHINA: WORLD N1 FOR SELF-MADE MILLIONAIRES
Source: HUNRUN Research 2014
Known Wealth in 2013:
Globally: 1.867 USD Billionaires
(+28 % vs 2012)
China: 358 USD Billionaires
(+36 % vs 2012)
Hidden Wealth:
Globally: 4000 USD Billionaires
China: 700 USD Billionaires
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
16
WHERE MILLIONAIRES IN DOLLARS CHOOSE TO LIVE
Source: HUNRUN Research 2014
0
50000
100000
150000
200000
Geographical Distribution By City
East China 43%
North China 24%
South China 17%
Others 16%
Geographical Distribution By Region
41% live in 1st tier cities (Beijing, Shanghai, Guangzhou and Shenzhen)
33% live in 2nd tier cities
17
TOP TRAVEL DESTINATIONS
Source: HUNRUN Research 2014
2013 2012
1 Australia ↑ 1 France
2 France 2 US
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
Average travel duration: 7,5 days/month for millionaires
2 to 3 trips overseas a year
18
FROM ULTRA TO AFFORDABLE LUXURY
The slow down of high end luxury will continue in 2014, but affordable luxury is
the growing segment.
Watches
Cosmetics, Perfume &
Personal Care
Leather goods
Menswear
Jewellery
Shoes Women's wear
Accessories
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Mainland
China luxury market by category (2012)
Since Oct 2012: new gifts regulation - 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. Greenbook
LUXURY MARKET , THE KEY DRIVERS
20
CUSTOMERS TARGETED – HNWI*
Source: GCF Research & Analysis, Asia Pacific Wealth Report 2013, World Federation of Exchange, World Wealth Report 2013
+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
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
HNWI = High Net Worth Individual ; assets > USD 1 M
China 1,1 M
India 0,2 M
Japan 1,5 M
Emerging Asia 0,8 M
Europe 3,3 M
USA 5,2 M
MEA 0,5 M
Latin America 0,6 M
-5%
0%
5%
10%
15%
20%
25%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Asset under Management Forecast CAGR (2012 – 2016)
Global HNWI in 2012 Historical Vs. Forecast CAGR
Au
M H
isto
rica
l CA
GR
(2
00
7-2
01
6)
European brands = 70% of the global luxury goods markets
Among the top 25 worldwide luxury brands, 18 are from Europe (mainly France & Italy)
21
HOUSEHOLD SPENDING POWER IN MEGACITIES*
* Megacity: Population > 10 Mn
** In PPP term
Source: GCF Research & Analysis, McKinsey, Morgan Stanley, The Diplomat
5,2
5,2
2,3
3,3
5,9
6,1
8,0
16,1
0 5 10 15 20
Germany: Rhein-Ruhr
France: Paris
India: Dehli, Mumbai, Kolkata
China: Beijing, Shanghai
2025e 2011
Number of households (in Mn) with annual incomes >EUR 15 K**
in megacities in 2011 & 2025e
Main cities in booming Markets are catching up in household spending power
Middle Income Households in China and India x4 between 2011-2025
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
22
RISING HOUSEHOLD SPENDING IN CHINA
Shanghai & Beijing will have about 16 M middle income households
(>USD 20K/y) in 2025: x5 vs 2011
Source: GCF Research & Analysis, The Diplomat
THE M&A TRENDS
24
COMPARABLE MULTIPLES
Source: GCF Research & Analysis, Factset, S&P, Yahoo FInance
Company Business
Overview
Turnover*
(Bn EUR)
Turnover
Growth
(%)
EBITDA
Margin*
(%)
EV*
(Bn
EUR)
EV/
Sales*
EV/
EBITDA*
2013
EV/
EBITDA
2012
LVMH
(FRA)
Apparel, Accessories
& Luxury goods 29 0,34% 24% 71 2,4x 12,2x 10,9x
L’OREAL
(FRA) Cosmetics 23 2,4% 21% 68 3,2x 16x 13,5x
RICHEMONT
(SWITZ)
Apparel, Accessories
& Luxury goods 13,4 29,% 27% 49 3,7x 13,5x 11,1x
KERING
(FRA)
Apparel, Accessories
& Luxury goods 9,7 0,1% 26% 30 2,2x 10,5x 11,8x
ESTEE LAUDER
(USA)
High end
Cosmetics 10,4 31,5% 18% 26 2,5x 13,6x 12,5x
LUXOTTICA
(ITA)
Apparel, Accessories
& Luxury goods 9,5 29,7% 20% 29 3,0x 15,3x 14,8x
RALPH LAUREN
(USA)
Apparel, Accessories
& Luxury goods 7,2 36,4% 18% 13 1,8x 9,74x 10,6x
HERMES
(FRA)
Apparel, Accessories
& Luxury goods 3,8 1,4% 37% 25 6,8x 20,6x 18,2x
PRADA
(ITA)
Apparel, Accessories
& Luxury goods 4,6 32,6% 33% 19 4,2x 13,2x 16,6x
TIFFANY
(USA) Fine Jewellery 4,0 33,3% 23% 12 2,9x 12,2x 10,1x
Leading Luxury players are US & Europe based
Average +6,3% growth of 2013 EV/EBITDA multiples vs. 2012
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
*Figures: 2014 April LTM
25
TRANSACTION MULTIPLES
Date Acquirer Target Description Deal
Value (M EUR)
Stake
(%)
Sales
(M EUR)
EBITDA
Margin
EV/
EBITDA
Jan
2014
L'OREAL
(FRA)
MAGIC HOLDINGS
(Hong Kong)
Cosmetics,
skincare and
facial masks
620 100,0% 160 15,3% 3,8x
Aug
2013
LVMH
(FRA)
LORO PIANA
(ITA)
Apparel,
accessories and
luxury goods
2 000 80,0% 490 20,0% 25,5x
May
2013
SICHUAN LESSIN
DPT STORES
(China)
FEDONE
(ITA)
Cashmere
maker 8,5 1,8% 280 15% 11,2x
Apr
2013
KERING
(FRA)
POMELLATO
(ITA) Fine jewellery 300 81% 146 17% 15x
Source: GCF Research & Analysis, Mergermarkets, Forbes, Capital IQ, Comité Colbert
Consolidation trend: individual brands are bought up by large luxury groups
Luxury brands owned by entrepreneur / family = 30% in 2011 vs 70% in 1995
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)
26
ASIA TO EUROPE M&A DEALS BOOM
Source: GCF Research & Analysis,
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.
June 2013
SUNSEEKER (UK) acquired
by DALIAN WANDA (CN)
May 2013
CLUB MED (CN)) acquired
by FOSUN (CN)
April 2012
GIVES & HAWKES (UK)
acquired by TRINITY (HK)
2007
MG (UK) acquired by
SAIC MOTOR (CN)
Feb 2013
SONIA RYKIEL (FR) acquired by
FUNG BRANDS (HK)
May 2013
CORUM (CH)) acquired
by FCHINA HAIDIAN (CN)
27
INVESTMENT LANDSCAPE
Despite the apparent dominance of the MNCs, several brands are
still privately-owned: 3 type of potential targets
Source: GCF Research & Analysis,
VICOMTE A
Since 2005 RUBY (Helmets)
Since 2007
PIERRE HERME
since1998
3. New luxury brands with innovative business model & unique competitive edge
PAIN DE SUCRE
since 1985
LUBINS (Perfume)
Since 1798
2. “Sleeping” stars
1. Independent “house” with international recognition
PARFUMS BERDOUES
Since 1902
CORTHAY
since 1990
AUBERCY
Since 1935
AURICOSTE (Horlogerie)
Since 1854
28
FRAGMENTED & REGIONAL INDUSTRY
In France, the luxury industry employs more than 200,000 people in
more than 40,000 companies
Source: GCF Research & Analysis, Comité Colbert/BCG
Key luxury manufacturers and subcontractors in France
29
ASIAN APPETITE FOR EXCEPTIONAL WINE ESTATES
Source: GCF Research & Analysis, BBC
Since 2008: >30 French Chateaux acquired by Chinese investors
& ~ 20 deals are currently in the pipeline
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%
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%
Gevrey-Chambertain
Les Carmes Haut Brion
30
CHATEAU LAGREZETTE = UNIQUE WINE ESTATE & WINES
Source: GCF Research & Analysis
The "Original MALBEC” noted 95/100 by Robert Parker in 2005
500 years history, 100 ha of premium vineyards
The wine of the kings of France!
Built in the 15th century, LAGREZETTE is classified as an Historical Monument with
Renaissance decoration and « Jardins à la Française »
31
“This is arguably the best Rosé on earth!”
James SUCKLING, world famous wine critic
CHATEAU D’ESCLANS = THE WORLD’S BEST ROSÉ
Rebuilt in the 19th century, the domain is located in French Provence and is surrounded by
267 ha of lands
32
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
ABOUT GEREJE Corporate Finance
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 expertise
Origination & Execution
Paris
Singapore
Origination
Bangkok, Berlin
Shanghai, Mumbai
33
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
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 Paris
OUR CROSS BORDER TEAM
34
11 years’ international experience in M&A
Former Manager at ADM, notably in charge of
M&A and Strategy
Bus. Dev. Director for MOD-ELEC, French
high-end electrical appliances producer &
Former Bus Dev director-Perle Noire (caviar)
MS in Mech. Eng. & Auditor of the CHEDE
7 years’ experience in cross border M&A
between Europe and Asia.
Co-leader of a team of 10 analysts across
Asia & Europe.
MSc in Corporate Finance & Financial
Engineering, Paris Dauphine.
Paul VALIN, Associate Partner
20 years’ experience in Bus Dev.
Ex MD of DANONE in India and ex VP
International for SPOTLESS
Trade Advisor to the French government.
MBA, INSEAD.
Stéphane ILIADES, Senior Partner
7 years’ experience in cross border M&A
between Europe and Asia.
Co-leader of a team of 10 analysts across
Asia & Europe.
MSc in Management, ESCEM Business
School.
Pierre-André MONTJOVET, Senior Advisor
OUR TEAM
Pisit JEUNGPRADITPHAN, Senior Advisor
Specific expertise in sell-side transactions
President of CFA Society in Thailand
Anil RAI, Junior Partner
4 years’ experience in cross border M&A
between Europe and Asia
BBA in Finance, NTU, Singapore
Antoine ALEMANY, Associate Partner
35
PE Funds 55%
HNWI 24%
Others 2%
Family Offices
14%
France 37%
ASEAN 21%
China 13%
Others Asia 13%
W. Europe
17%
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
36
F&B 40%
ASEAN 38%
India 8%
China 8%
France 33%
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
Health & Beauty
40%
NewTech
5%
Industry &
Cleantech
15% W. Europe
14%
Direct access to key shareholders/management of luxury companies mainly in:
Wine & Fine Foods:
Jewelry & Haute Horlogerie
Cosmetics & Fragrances
Apparels, Furniture & Accessories…
37
SAMPLE OF GEREJE ASSIGNMENTS
OUR EXCLUSIVE MANDATES
OTHER INVESTMENT OPPORTUNITIES
Fragrances – France based (EV EUR 12 M)
EUR 2.5 M minority stake to boost the development of one of the most legendary luxury perfumery house (>200 years history)
Haute Horlogerie – Euro-Asia based (EV EUR 3 M)
EUR 2 M minority stake to boost the development of the only Asian Swiss-made watch brand designed to target Asian market
Jewellery – Europe based (EV EUR 10 M)
EUR 4.5 M minority stake to boost the development of one of the oldest (>100 years old) European high end jewelry house.
High-end cigars – Europe based (EV EUR 2 M)
The owner is planning to retire and is looking for a strategic buyer capable to boost the company’s international expansion with a focus on Asia
Swimwear – Euro Asia based (EV EUR 1.6 M)
~EUR 1 M minority stake to finance the opening of 2 flagships
in China and boost the distribution
Caviar – Europe based
The N3 producer of caviar worldwide, The caviar comes from farm sturgeons and is considered as one of the world’s finest.
Furniture & Accessories – Euro-Asia based (EV EUR 15 M)
An exclusive luxury / lifestyle brand for furniture & accessories,
founded by a French renowned designer based in Asia
Premium Alcohol – Europe based
Producer of an award winning premium vodka which is distributed in
more than 10 countries globally
Dermo-cosmetic brand – Europe based
EUR 30 M Health& Beauty group formulating, producing and distributing its
own brands of premium natural & organic cosmetics and food supplements
Fashion – Europe based
EUR 20 M renowned french fashion house established in the 60’s. The company launhed its own perfume collection.
Fashion– Europe based
EUR 15 M fashion brand dedicated to women and children securing 70% of its sales overseas.
Accessories – Europe based
EUR 5 M renowned brand specialised in handcrafted luxury products such as cabinets, cigar, humidors, watches & jewellry boxes, ashtrays…
38
The information contained in the presentation has been provided collated from publicly available sources or other sources that GCF
(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)
© Copyright 2014 GEREJE Corporate Finance. All rights reserved
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