US-based private equity (PE) investor Alpha Wave Global has entered the race to acquire 25% stake in New Delhi-headquartered wellness company VLCC Healthcare Ltd, which is majority owned by global PE fund Carlyle.
The deal could see VLCC being valued at $600-700 million, three people with knowledge of the development said.
“Alpha Wave Global has submitted a binding bid to acquire a minority stake from Carlyle,” the first person quoted above said, adding that Alpha Wave is also likely to infuse some fresh capital into the company.
“The term sheet from Alpha Wave is conditional and is contingent upon the company meeting several milestones such as FY25 revenue growth, targeted store openings and other clauses,” the second person noted above said. “The deal is likely to be closed only next financial year.”
The deal comes a year and a half after Carlyle bought a majority stake in the company for $300 million in January 2023. Carlyle currently holds around 63% stake in the company and the remaining is held by one of the founders, Mukesh Luthra.
Private equity (PE) firm TPG was earlier in talks to pick up a stake in VLCC alongside other investors.
Emailed queries to VLCC and to the spokesperson of Alpha Wave were unanswered. Carlyle declined to comment.
The stake sale follows a trend of derisking by global private equity (PE) companies in their portfolio firms where they hold majority stake.
“Given that the business has performed well and the valuations are likely to go up, the PEs are looking to take some money off the table and derisk their larger bets,” the third person cited above said. All three persons spoke on condition of anonymity.
Carlyle has amped up its deal activity in the country in recent times, with investments in companies such as VLCC, Varmora Tiles and Yes Bank, among others, in the past two years. Over the past six months, it partly exited Yes Bank through block deals in the open market.
VLCC’s financials and operations
As per a May 2024 ratings release by Icra Ratings, the VLCC Group reported a 22% year-on-year (y-o-y) growth in revenues in FY23 and a further ~19% y-o-y increase in FY24 (as per the provisional estimates shared by the company) to ₹958 crore, led by 19 net centre additions, and increase in same-store sales by ~20% on y-o-y basis in FY2024.
“Resumption in discretionary spending with inclination towards health-based slimming and other activities resulted in increased revenue per centre for the Group. The OPM (operating margins) in FY24, although declined marginally by 40 bps to 23.3% due to increase in marketing spends, remains healthy,” the release said.
Beauty and personal care
Founded in 1996, VLCC Healthcare provides beauty, slimming, fitness and health services across domestic and international geographies. The company sells beauty/personal care products.
VLCC’s operations, at a group level, can be broadly divided into three categories: wellness (slimming and beauty), education, and personal care products (product-sales).
While the domestic wellness and education (vocational training courses) businesses are housed under VLCC Healthcare, the international wellness operations are under its subsidiary, VLCC International Inc. The personal care products business (manufacturing and sales) is mainly carried out under another subsidiary, VLCC Personal Care Ltd.
As per a report by Statista, the beauty and personal care market in India is projected to generate a revenue of $31.51 billion in 2024. The largest segment within this market is the personal care segment, which is estimated to have a market volume of $14.31 billion in 2024.
Compared globally, the US leads in terms of revenue generation, with an estimated revenue of $100 billion in 2024. According to data from Statista, in India, the per person revenue generated in the beauty and personal care market is approximately $21.86 in 2024, based on the country’s population figures.