Foreign institutional investor (FII) Elara Capital and Cresta Fund have together picked around 7.4% stake in Su-Raj Diamonds and Jewellery Ltd for Rs 35 crore through a preferential allotment. The company that is into gold and diamond jewellery besides polished diamonds, is also issuing warrants to promoters that will allow the firm to raise an additional Rs 23.8 crore within the next 18 months and ensure that the promoters maintain their 35% holding.
While Elara Capital is investing Rs 14.7 crore to pick 3.1% stake, Cresta is investing Rs 20.3 crore for 4.3% (post issue).
The preferential allotment and the warrant issue is at a 10% premium to the last traded price on Thursday. The stock jumped almost 6.5% in early morning trade only to close at Rs 64.9, 2% more than the price on Thursday.
This is the second straight year when the firm has raised resources from FIIs. Last year it issued around 1.8 million shares at a price of Rs 43.12 per share raising Rs 77 crore (~$ 17 million).
Su-Raj Diamonds and Jewellery Ltd, that was predominantly a polished diamond player till seven years ago, expanded downstream business. For the year ended March’10, three fourth of its revenues came from jewellery business.
Bulk of its sales comes from jewellery exports with middle East being the prime destination, accounting for over half of its revenues. Europe and US accounts for around 16% of total revenue each.
The company is reportedly eyeing acquisitions of mid-size companies having a marketing presence in the Middle East along with a larger presence in the booming jewellery retail business in India. The company is betting big on retail business with projections to derive almost half of revenues from retail by 2014-15.
Jatin Mehta, chairman of Su-Raj Diamonds had recently said the firm also plans an equity infusion of around Rs 700 crore by 2015 to increase its manufacturing operation as well as retail stores in
Its retail business comprises Forever Destination stores besides jewellery brand Carbon and a partnership with retail sector king Kishore Biyani’s value format retail chain Big Bazaar for shop-in-shop product placement.
Jewellery retailing is fast becoming a big money churner with number of players eyeing a piece of action besides segment pioneer Tanishq.