Why is LVMH Interested In El Ganso?

The world´s largest maker of luxury products, LVMH luxury seems to be interested in acquiring part of the capital of the Spanish clothing company El Ganso

Leeson. 16/09/2015

Venture capital firm L Capital is negotiating with Arcturus Capital, owner of El Ganso, to acquire a stake in the Spanish company, according to several media. L Capital is the venture capital firm funded by LVMH and Groupe Arnault, which belongs to Bernard Arnault, chairman and majority shareholder of the LVMH group. In this case, L Capital and LVMH want to replicate the model that has given them so much success (and some famous failures, as Hermès).

El Ganso 3
El Ganso Red Royal Blue Window Check Dress. Click to buy

It is to buy a minority stake and analyze the evolution of the company to increase it later to gain control if it works well (as in the case of Loewe) or sell it later with capital gains if it cannot gain control or loses interest in it. LVMH wants to increase its exposure in Spain after remaining as shareholder of Pepe Jeans, leaving Textil Lonia (Purification Garcia, CH Carolina Herrera) and failing to buy a stake in the jewelery Tous and accessories and clothing company Bimba y Lola.

El Ganso 2
El Ganso Royal Blue Mustard Maroon Layered Dress. Click to buy

El Ganso produces clothing and accessories sold in over 110 stores in 10 countries, including Spain, France and United Kingdom, among others. The company has grown rapidly, as it only has 11 years of life but gets annual revenues of €60 million (in 2014), albeit with a much more modest net income figure, less than €5 million, for its commitment to growth.

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El Ganso Red Corolla Dress. Click to buy

El Ganso (and its parent Arcturus Capital) was founded by Cebrián brothers, Álvaro and Clemente, who wanted to implant in Spain a business model based on textiles that were successful in the UK and did not exist in Spain. The success of the business accelerated its national and international growth.

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