Will the 'swadeshi' Patanjali go global with Louis Vuitton's help?
The steep growth of Patanjali has grabbed major eyeballs. Its latest admirer is French luxury group LVMH Moët Hennessy Louis Vuitton SE, aka Louis Vuitton/LVMH. The group is willing to infuse $500mn in Patanjali through its L Catterton private equity fund, almost half of its remaining Asia fund. It won't be easy: Patanjali has projected itself as strictly anti-multinational. But are the times changing?
Patanjali was founded by Ramdev and Acharya Balkrishna in 2006; it aimed to use ayurveda to create swadeshi health products. Its growth in the last two years has been unprecedented: since 2016, it has jumped 26 places to 19th on Forbes Annual India Rich List 2017. Weeks ago, it was deemed India's most trusted FMCG brand in the Brand Trust Report India Study 2017.
"We would love to work with (Ramdev) if we can find a model," said L Catterton Asia Managing Partner Ravi Thakran. Though it generally invests $100-200mn per company, ET says it is ready to bet as much as $500mn in Patanjali.
The biggest factor working against a potential Patanjali-LVMH deal is the former's 'swadeshi' tag: Patanjali has built itself as an 'Indian' company and managed to give global competitors like Hindustan Unilever stiff competition. It offers 'desi' equivalents of MNC-made cornflakes, noodles, ketchup and jam, biscuits, shampoos and soaps, and is even planning jeans, sanitary napkins and diapers!
There are other factors that could lure Patanjali though. For one, LVMH can help it become a global brand and expand its markets in US, China, Japan, Europe and elsewhere, Thakran said. "We want to celebrate the same Indian-ness better. It would be great to find a marriage," he added. Patanjali is anyway looking for Rs. 5,000cr to set up new plants.
Patanjali CEO Acharaya Balkrishna has already expressed readiness to talk to LVMH, but there are conditions. For one, Patanjali won't accept money in equity or shares, he says. Also, since it's easily getting loans from banks, potential investors have to do the same at lower interest rates, Balkrishna added. However, LVMH shouldn't keep waiting; Balkrishna claims to already have met dozens of potential investors.