LVMH pays $80m for stake in Melbourne sportswear firm 2XU

2XU, the sportswear brand whose wetsuits cost up to $1250, has a new shareholder that is perhaps more used to the red carpet than to the exertions of wealthy, active middle-aged men or professional athletes.

LVMH Moet Hennessy Louis Vuitton, the Paris-based conglomerate that controls Dior and Krug champagnes, has paid $80 million for a 40 per cent stake in Melbourne-based 2XU through its Singapore-based investment fund L Capital Asia.

"We will build a bridge to Asia" for 2XU, Ravi Thakran, group president for LVMH in south Asia, Southeast Asia and the Middle East, told DataRoom. "We have knowledge of brand building and will keep 2XU distinct, as we do with all our brands."

Thakran values 2XU at $200m and L Capital's investment in the company is its first by its new $US1 billion ($1.1bn) fund. Earlier this year, L Capital took a stake in the iconic Australian outdoor clothing company R.M. Williams and last year invested in Jones the Grocer, which has 15 outlets in Singapore, the Middle East and Australasia.

2XU was founded in 2005 by rag-trade veteran Clyde Davenport, triathlete James Hunt and sales and marketing specialist Aidan Clarke. In eight years, 2XU has gone from zero revenue to about $65m this year, says Davenport, who wants the company to have about $150m in sales by the end of 2015.

Davenport, Hunt and Clarke will cut their shareholding in 2XU to 42 per cent following the LVMH investment. Lazard Australian Private Equity's shareholding in 2XU has fallen to 18 per cent from 30 per cent while making an internal rate of return of 50 per cent per annum on its 2011 investment.

2XU has one store in The Philippines, 12 stores in Australia, one in New Zealand and one in the US with plans to open another outlet in the US. There are 165 people working at 2XU.

"The founders have given up their shareholding to accelerate our growth," Davenport told DataRoom. That includes expanding into Europe and the US where Davenport estimates more than 50 per cent of players in the National Basketball Association wear 2XU.

"We have wetsuits that retail at $490 all the way up to $1250," says Davenport.