Is It Cheap To Sell From 2 Billion To 800 Million GXG?

Ningbo's clothing brand GXG, which did not talk with Semir, found a new patron.

It is reported that LVMH group's private equity LCapitalAsia seeks $130 million (about 832 million yuan) loans, which will mainly be used to acquire GXG70% equity.

If the paction is successful, this price is much lower than the 1 billion 980 million ~22.6 billion proposed by Semir.

It is understood that LCapitalAsia financing to acquire GXG70% stake, the management team will retain the remaining 30% stake.

The average duration of the loan is 3.58 years.

According to GXG's interest rate, tax, depreciation and amortization profit (EBITDA) of US $80 million (about 512 million yuan) in 2014, the loan leverage ratio is about 2.32 times.

From 2 billion to 800 million, no matter who the buyer is, if GXG is sold, it looks like a cheap sale. After all, the price gap is a bit too big.

As we all know, GXG has had a deal with Semir.

In June 2013, Semir clothing announcement announced that it intends to purchase 71% of China zhe Mu Shang (GXG parent company) with its own funds from 1 billion 980 million yuan to 2 billion 260 million yuan.

In order to achieve this acquisition, Semir's preparations are not enough.

However, after six months, the biggest merger and acquisition of the domestic garment industry in 2013 was finally aborted.

There are many reasons for the failure of takeover.

No more of this here.

What kind of company is Zhong zhe Mu Shang? According to the data, zhe Mu is still a private man in the middle and high end.

The company owns many brands such as GXG, gxg.jeans, gxg.kids, yatlas and so on.

Although it has only started operation since 2007, its terminal sales have reached 3 billion yuan in just a few years. At present, there are about more than 1200 retail outlets in the mainstream department stores and shopping centers nationwide.

And its main men's clothing brand GXG has been doing well, and the sales of menswear on e-commerce platform on Tmall platform.

In the past few years, it is the top of the list. In 2015, double 11 and GXG ranked fourth in Tmall menswear brand sales.

It is estimated that GXG will make us $90 million this year (about 576 million yuan).

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Let's take a look at what the LCapital fund company of LVMH group is doing.

In the LVMH group, LCapital fund company is a separate category. It was founded in 2001. Currently, it has more than 20 shares in different proportions. Its investment target is different from that of LVMH group.

The LCapitalAsia Fund aims to invest in Asian emerging economies with the aim of investing in some Asian companies that are developing rapidly but are generally smaller.

These companies offer substitutes for luxury goods, such as clothing, home accessories, beauty care, The Inn Boutique, entertainment media and even private education.

In recent two years, the company has established an Asian branch to find investment opportunities for Asian companies such as India and China, and has begun to buy Asian fashion brands.

Up to now, LCapitalAsia has invested a lot in the Asian region, such as the Royal Watch Jewellery Limited, Ming Feng Jewelry Group Limited, India GenesisLuxury, Singapore Charles&Keith and so on.

As a private equity fund, LCapitalAsia should seek short-term capital returns, but another important role of the fund is to serve as a brand incubator of LVMH group in Asia, that is, to find a large number of second-class luxury brands in Asia, including high-end fashion brands, and to cultivate after joining the stock market. It is very likely that the brand sequence will be included in the LVMH at the right time after the maturity of the brand.

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In 2011, LCapitalAsia bought part of China's Xin he (Xiamen) Garments Co., Ltd., and became the second largest shareholder of Xin he. In 2012, it joined the CITIC Industrial Fund to buy 10% of the women's clothing brand.

At the moment, it plans to buy GXG, the menswear brand.

To be sure, such mergers and acquisitions will continue. Hsin Ho, Ou Shi Li, GXG are just the beginning of LCapitalAsia and the LVMH behind China in the Chinese market, and it is by no means an end.

From Hsin Ho and Ou Shi Li to GXG, China's clothing brand has continuously entered, and the strategic intentions of LVMH group's investment and brand development in Asia can be seen.

Commercial investment is naturally driven by interests. The marriage between the international luxury group and China's clothing brand is no exception. For both sides, it is actually beneficial to each other. It is said that they can make use of each other's available value and gain their own interests in the capital market.

Most of LCapitalAsia's capital comes from us and Asian investors, and less than 10% is provided by LVMH group. With the fame and influence of LVMH group, LCapitalAsia is rapidly rising in Asia.

By working with LCapitalAsia and even with the world's largest luxury goods group LVMH, it has created more possibilities for Chinese clothing brands.

But for GXG, from 2 billion to 800 million, no matter who the buyer is, is it cheap? Can it really raise the value of Chinese brand? Does the interest priority LCapitalAsia really provide enough room for growth and a rich fermentor for Chinese brands? What is the prospect of cooperation between the two sides? Will it be a win-win outcome? Will more developed and potential brands belong to China's own brand, will it become an inconspicuous piece of LVMH in the LVMH? All of this is hard to say.

Undoubtedly, the integration of traditional industrial market and capital market is rapidly changing the development path and strategic choice of garment enterprises.

In addition to covetous international groups, mergers and acquisitions in China's local market have also occurred frequently in recent years.

The clothing industry has entered the era of capital. The reorganization and regeneration of resources under the driving force of capital will lead to a bigger and more profound change in the competition pattern and mode of competition.

For Chinese clothing enterprises, even if business goes to business, the brand will return.

But we still need to forget our hearts, and we must always.