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Kalyan Jewellers raises $196M from Warburg Pincus

20 October, 2014

Kalyan Jewellers India Pvt Ltd, a Kerala-based jewellery retailer, has raised Rs 1,200 crore ($195.6 million) from private equity firm Warburg Pincus, which also marks the second biggest bet on an Indian company ever by the PE firm.

In a separate filing with Competition Commission of India (CCI), Warburg Pincus had said it is acquiring 24 per cent stake in Kalyan Jewellers. This would mean the transaction values the private jeweller at Rs 5,000 crore or $820 million. CCI had approved the transaction last week.

“Warburg Pincus’ investment in Kalyan Jewellers is the largest private equity investment into the jewellery industry in India, and is an acknowledgement of the company’s highly-talented team, its pioneering role within the industry, and its commitment to the highest levels of customer service. We are excited to partner with the team at Kalyan Jewellers as they continue to grow the business going forward,” said Vishal Mahadevia, MD and co-head India, Warburg Pincus.

Founded in 1993, Thrissur-headquartered Kalyan Jewellers is one of the largest jewellery manufacturing and distribution companies in the country. Presently, it has a network of 55 exclusive outlets in India and six exclusive outlets in the United Arab Emirates.

“Jewellery is one of the largest consumption categories in India, and Kalyan Jewellers has created a unique position as one of the largest and the most trusted jewellery brands in India. We continue to be guided by our core values of integrity, transparency and customer focus that have enabled us to gain our customers’ trust over the past two decades. We look forward to working with Warburg Pincus as we continue to build on our foundation and move onto our next phase of growth,” said T S Kalyanaraman, chairman and MD of Kalyan Jewellers.

The company plans to expand more in domestic market by launching exclusive outlets in existing markets and foray into newer markets with an emphasis on the north and the west regions of the country. It also plans to scale up its global presence in the Middle East, Kuwait and Southeast Asia including Singapore and Malaysia.

Kalyan Jewellers, which will add over 28 outlets in the next six months, eyes Rs 25,000 crore revenue for the current fiscal.

Kalyan Jewellers, the flagship of Indian silk and jewellery retailer Kalyan Group, has five sub brands for gold named Floret, Tamas, Bloom, Rang, and Eterna. It has also six sub brands for diamonds including Anokhi, Sakshi, Bliss, Amore and White Mistry.

For Warburg Pincus, this is the first such investment in jewellery manufacturing sector even though it has previously backed Vaibhav Gems.

In 2011 Warburg Pincus had exited its five-year-old investment in gem & jewellery exporter Vaibhav Gems with over 90 per cent haircut, making it one of the biggest loss-making private equity exits in India. The PE firm had sold its entire 28 per cent stake for Rs 18.4 crore or about $4 million then against the purchase cost of Rs 247 crore.

The Jaipur-based company Vaibhav Gems had gone into a tailspin ever since Warburg Pincus picked a large minority stake and followed it with a mandatory open offer that gave it as much as 32 per cent stake in July 2006.

However, the PE firm has now bet what is its second biggest bet ever in an Indian company behind its $290 million investment in Bharti Televentures which fetched it record returns more than decade ago.

Kalyan Jewellers also marks its third addition to its India portfolio this year after buying a stake in Laurus Labs and CarTrade.com besides putting in more money in some existing investees such as AU Financiers and Quikr.

Last week, it invested Rs 185 crore ($30.2 million) along with existing investors Canaan Partners and Tiger Global in Mumbai-based CarTrade.com, an online auto classifieds platform owned and operated by MXC Solutions Pvt Ltd.

(Edited by Joby Puthuparampil Johnson)


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Kalyan Jewellers raises $196M from Warburg Pincus

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