After adding bling to Dubai’s nightlife with the $30 million Cavalli Club, Italian fashion designer Roberto Cavalli is looking at a similar presence in India, said an executive involved directly with the deal.
Pragma Group SAL, a Lebanon-based holding company that has the franchise for Cavalli Club, has mandated Deloitte Touche Tohmatsu Ltd to raise money and look for a partner to launch the club in India.
“They are looking to raise money to partner with someone in India,” said Avinash Gupta, head, financial advisory, Deloitte Touche Tohmatsu India Pvt. Ltd.
The amount sought to be raised is $20-25 million, he said.
Prospective investors include high networth individuals (HNIs), apart from Bollywood and sports personalities.
Pragma, which has the exclusive franchise for the club in the Middle East, North Africa, South-East Asia, Turkey, Armenia, India and Brazil, has interests in retail, technology, food and beverage and leisure. Investment partners are being sought for Mumbai or Delhi.
The Dubai club has prompted the move to exploring India.
One “aspect to our rationale behind choosing India as one of the core destinations for Cavalli is due to the extremely successful launch of Cavalli Club in Dubai,” a Pragma spokesperson said in an email. “We noticed that a big bulk of our clientele base consists of Indians.”
The club is located in the Fairmont Dubai Luxury Hotel.
Pragma may also be starting Cavalli Cafes in several cities in India, the spokesperson said.
India’s luxury market is worth about $3 billion and is home to brands such as Louis Vuitton, Chanel, Gucci, Versace and Jimmy Choo.
“There certainly is a market for this luxury concept,” said restaurateur Rahul Akerkar, who runs the Indigo chain of restaurants.
Clubs, however, thrive on novelty. “In restaurants, it’s different,” he said. “Consumers form loyalty.”
Besides high operating costs, which include getting close to 20 licences and paying 25% value-added tax, clubs also need permission to stay open late, integral to their success.
“Not too sure if it is the right time yet, maybe a couple of years down the line there will be more takers,” said Sanjay Kapoor, managing director, Genesis Luxury (part of Genesis Colors), which sells brands such as Bottega Veneta, Burberry, Canali, Etro, Just Cavalli, Jimmy Choo, Paul Smith and Tumi in India.
India was estimated to have 4.5 million affluent households, with an annual income of $16,000 in 2010, which is expected to double to 9 million by 2015, according to McKinsey and Co.
Despite growing affluence, “India is still a very, very price-sensitive market,” said Jay Singh, co-founder and executive director of JSM Corp. Pvt. Ltd, which has the Hard Rock Café franchise in India.
Singh also ran the FTV clubs in Delhi and Bangalore for two years before shutting them in 2004 as the format was not sustainable.
The market does have room for such concepts, said Keenan Thams, who runs Triology, an eight-month-old upscale club at the Sea Princess in Mumbai. “There is a large enough market for many high-end clubs to be there in the market,” he said.
To sustain itself, a club requires 600-700 people on a weekend with an average bill of Rs.3,000-4,000, which is not a difficult threshold to achieve, Thams said.
