L Catterton has reached a first close on the Japan vehicle that will be deployed alongside its fourth Asia flagship fund with commitments amounting to approximately half the targeted JPY 40bn (USD 253m), according to a source familiar with the situation.

LPs include pension funds, insurance companies, and banks. None is an existing investor in any L Catterton strategy globally and all are generally averse to backing first-time funds, the source added. While there was interest from offshore LPs, the firm has decided this vehicle will cater primarily to Japan-based players.

L Catterton declined to comment on fundraising.

Japan private equity and venture capital fundraising is on a hot streak, contrasting the weak sentiment seen in much of Asia. Around USD 9.5bn has been committed to Japan-focused funds to date, AVCJ Research’s records show. This compares to USD 11.3bn for the entire 12 months of 2023.

L Catterton’s Japan vehicle was launched in the first quarter of 2024, while marketing for Fund IV – which has a target of USD 800m – began last month. L Catterton is also raising a parallel vehicle for India, announcing in March that Sanjiv Mehta, formerly South Asia president of Unilever and chairman and CEO of Hindustan Unilever, would be its joint venture partner in that effort.

The yen and rupee-denominated vehicles will participate in the same deals as the flagship fund, but just in their own geographies on a pro rata basis. No specific target has been given for the India vehicle. Rather, L Catterton has told investors that it plans to deploy USD 500m in India across the flagship fund and the India vehicle, the source explained.

L Catterton’s third core geography is China. It has already tapped local investors there, achieving a first close on a debut renminbi fund in late 2022. The overall target is CNY 2bn (USD 277m). Unlike the Japan and India vehicles, it operates under a separate strategy from the Asia fund and has an independent deal pipeline.

Consumer sector specialist L Catterton closed its third Asian fund on USD 1.45bn in 2019. A USD 360m continuation vehicle was raised in 2022 comprising structured minority interests in all unlisted fund investments. The bulk of the proceeds were used to make distributions to LPs, with a portion allocated for new deals.

Fund IV is known as L Catterton Asia II in recognition of the regional reset that happened following the merger of Catterton and L Capital. Almost all the L Capital Asia team has departed and L Catterton is referencing only the track record of its current team in fundraising, the source said.

This means separating Fund III investments into pre-2019 and post-2019 periods. More than USD 1bn has been deployed across 19 deals since 2019, including fund commitments and co-investment. The portfolio has generated a gross IRR of 26%, realised and unrealised gross multiples of 3.1x and 1.8x, respectively, and distributions to paid-in (DPI) of 0.3x.

L Catterton’s first Japan investment was eyewear brand Owndays, which closed in early 2019. It was followed by healthcare business PHC Holdings Corporation and beauty and personal care brands Etvos and Ci Flavours. The most recent addition came in September 2023 with the acquisition of a majority stake in veterinary services group Withmal.

Owndays became the first exit in June 2022 when it was sold to India-based eyewear retailer Lenskart as part of the latter’s global expansion drive. L Catterton had already helped Owndays solidify its international position – to the point that revenue and profit were mostly derived outside of Japan. The private equity firm generated a return of 3x-4x.