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Singapore. It's a fairy tale that has seen two brothers go from the modest Ang Mo Kio neighborhood to high-fashion Paris.

Charles & Keith, the once-humble local shoe retailer, is now partly owned by French luxury giant Louis Vuitton Moet Hennessy (LVMH).

The Wong brothers, who own the company, have sold a 20 per cent stake to L Capital Asia, the private equity arm of LVMH, for more than $30 million, sources told The Straits Times.

The deal, which values the company at close to $200 million, was completed in November after L Capital fought off a slew of rival suitors that included other private equity funds, high net worth investors and even a manufacturing firm.

The feeding frenzy is testament to the growth of the local firm, which has shot to prominence since brothers Charles Wong, 37, and his brother Keith, 35, opened their first store in Singapore's Amara Hotel in 1996.

But the deal is more than just about the money, said the elder  Wong, the chief executive, confirming the deal from Shanghai, where he is now based. The younger  Wong is the chief operating officer and designs the shoes.

It will give Charles & Keith access to the branding expertise of LVMH, owner of the world's top fashion labels including Marc Jacobs, Dior and Givenchy, and allow the firm to benefit from being taken under the wing of LVMH as it expands around the globe.

The company wants to conquer the United States, China, India and Western Europe. It already has 229 stores across mainly Asia and the Middle East under its Charles & Keith and Pedro brands.

Charles & Keith sells women's shoes while Pedro carries footwear for both men and women.

 Wong said he was happy with the deal, which took a long time to come together.

"There have been a lot of companies talking to us and we spent a lot of time considering all the options. We were definitely reluctant to sell the stake, but in the end it was more for the company to grow to the next level. We were looking mainly at knowledge transfer and for someone to help us understand certain markets deeper.

"We are looking at the bigger picture and how we can grow our company's revenue to three to five times what it was last year in a short time. We hope we can, through them, expand, improve and learn. That's the main reason we let them have the stake."

Recounting events of last year, chief financial officer Dicky Koh said the brothers had been happy the business was running at a good speed - it has grown at a compounded annual rate of 28 percent for the past decade.

"But L Capital wanted to come in and add that turbo, to help us grow even faster," he said.

"They already knew that if they came in, even without doing anything, they would be able to benefit just as a pure financial investor. But they also had the expertise and people that can help us. That was the kind of fit we were looking at."

In the end, it was the promise of the chance to conquer China that appeared to have swung the deal.

Wong had witnessed the worldwide success of Sephora, a global women's cosmetics chain owned by LVMH, especially in China, and felt that Charles & Keith could learn from Sephora's growth strategy.

He has made it his personal mission to succeed in China and moved there permanently to oversee the business 11/2 years ago.

There are now six Charles & Keith stores in Shanghai, although they are not yet profitable,  Koh said.

Charles & Keith wants to open 100 stores there in the next five years. It plans to own all the stores, as its does the stores in Singapore. The company franchises its stores everywhere else.

What was key is LVMH's connections with landlords in China,  Koh said.

"They can put us at the negotiating table and say that we have all these brands under our portfolio, including Charles & Keith, and this will help us secure a good rate."

Recently, the company also went with people from LVMH to meet potential partners in the US, a market it has not yet ventured into, said  Wong.

Charles & Keith will also leverage on its new owners and send staff to Paris, or get trainers to come to Singapore, so they can attend marketing and visual branding courses that will help in-store display concepts and marketing campaigns.

The deal was struck after a nine-month-long pursuit led by  Ravi Thakran, managing partner of L Capital Asia. They were introduced by PrimePartners Corporate Finance chairman Quek Peck Lim, a veteran banker. It almost fell through at some points, when the brothers got cold feet because of the emotional attachment to the company they had built from scratch, and also over the uncertainty of bringing in a fund with a short-term investment horizon of just four to five years.

Moreover, the brothers did not want to sell,  Koh said, because they did not need the money.

But  Thakran persevered. He assured the brothers that the investment was genuine and to help the firm grow in the long run.

Eventually, Charles & Keith came up with a "wish list" of what it wanted from its new partners. It would receive training from LVMH and get LVMH senior management on its board.

That was how it was agreed that one board seat was to go to  Levy, who resigned last week from LVMH to take up a position as adviser to Guess founder Paul Marciano.  Wong could not comment on whether or not  Levy would remain on the Charles & Keith board.

With the French luxury giant taking the company under its wing, will Charles & Keith still retain its value-for-money image?

Wong said that while it is true that the company is looking to slowly move its branding more upmarket, it will always produce affordable shoes for the masses.

"(Spanish clothing retailer) Zara is a very good name for that - it is fast fashion and affordable. We want to make sure that our consumers see our brand as high fashion and also suitable for them," he said.

The company will also remain separate from LVMH's stable of designer brands.

"We don't want to ride on that brand. We want to maintain our DNA in terms of how we grow our two brands. We don't see the need to associate, not even with Sephora,"  Koh said.

As for what happens after LVMH's fund exits its investment,  Koh said the company will probably look to either list on a stock exchange or buy back the shares.

"We feel that if we are able to capture as much value-add from them within these next five years, then it is mission accomplished for us."

He added: "Of course as we grow to a good size, probably, an IPO (initial public offering) could be a good option for us. But we are not looking at that for now. There is still a lot of room for us to grow."

 Wong said: "My goal is to make sure that our brand is in all countries and cities, to make this a true global brand from Singapore."

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 2553 5055.