PC Jeweller raising $38mn from Fidelity

Delhi-based jewellery retailer PC Jeweller Ltd is raising Rs 257 crore($38.2 million) from US-based investment firm Fidelity to support its expansion through small sized and franchised stores.

The firm said on Wednesday that its board has approved the preferential allotment of compulsorily convertible preference shares to several investment entities under Fidelity. It did not share further details.

But based on last traded price of PC Jeweller a day ahead of the announcement, Fidelity run funds would pick around 3% stake, as per VCCircle estimates.

This is the second private funding for the firm to fuel its expansion plan this year. It had earlier raised Rs 427 crore ($64 million then) from an existing investor DVI Fund.

Private equity investor Creador is another investor in the firm.

PC Jeweller, known for its mega-size stores in localities such as Karol Bagh and South Extension in Delhi, is coming up with smaller-sized stores to target customers in the middle and lower-middle sections of the society.

The company's head of finance, Sanjeev Bhatia, told VCCircle last week that the company intends to come up with eight to 10 small sized stores in cities including Delhi, Dhanbad and Bhubaneshwar this financial year.

It has recently opened two such units in Laxmi Nagar and Yamuna Vihar areas of national capital. The size of the small stores will be around 1,500–2,000 sq ft; its large-format outlets cover an area of about 5,000 sq ft on average.

The public listed company, which has grown from one store in 2005 to 63 stores now, will also spare a part of the capital to set up four franchised units.

As part of growth plans, it is tying up with local jewellers as franchisees to expand across India. The first franchisee outlet is in Gwalior, Madhya Pradesh.

The company plans to open 20 stores every year till 2020 across all store formats.

It will also use part of the funds raised from DVI and Fidelity to set up a manufacturing unit in Delhi-NCR.

PC Jeweller competes with the likes of Kerala-based Kalyan Jewellers and Tata Group’s Tanishq. Kalyan Jewellers has made its presence felt in north India where it now has multiple stores, including a mega store in PC Jeweller’ den – Karol Bagh. PC Jeweller also competes with regional players like PC Chandra, Anjali and Senco Gold in West Bengal, where it has launched three stores.

Jewellery business in India is highly fragmented.

PC Jeweller, which posted a net profit of Rs 400 crore on net sales of Rs 7,330 crore in 2015-16, hasn’t given any guidance for this financial year but aims to maintain the pace of growth it has been clocking over the years. Last year it recorded 15% rise in revenues though its net profit grew by a modest 5.5%.

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