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Warburg Pincus-backed Kalyan Jewellers gets SEBI nod to float IPO
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Kalyan Jewellers India Ltd, which counts US private equity giant Warburg Pincus as its backer, has received a regulatory nod to float an initial public offering (IPO).

The Securities and Exchange Board of India (SEBI) issued a final observation to Kalyan Jewellers’ proposal on 15 October, according to information made available on the capital markets regulator’s website.

This takes the number of companies to receive regulatory approval for an IPO so far this year to 21. SEBI had cleared 28 IPO proposals last year, 72 in 2018 and 46 in 2017.

India’s biggest branded jewellery retail chain filed its draft prospectus with SEBI for an IPO in August this year. 

The IPO comprises Rs 1,000 crore in fresh issuance and a secondary share sale of Rs 750 crore, of which PE firm Warburg Pincus will sell shares worth Rs 500 crore.

Promoter and chairman TS Kalyanaraman will sell shares worth Rs 250 crore, according to the draft prospectus. The exact stake dilution is unclear as the proposal doesn’t specify the valuation that the company is targeting.

The company aims to use about Rs 700 crore of net fresh proceeds to meet its working capital requirements besides an undisclosed amount towards general corporate purposes.

The proceeds from the secondary sale will go to the selling shareholders.

Axis Capital, Citigroup Global Markets (India), ICICI Securities, SBI Capital Markets, and BOB Capital Markets are merchant bankers arranging and managing the share sale.  

VCCircle had reported about Kalyan Jewellers’ IPO plans and the company shortlisting bankers nearly three years ago.

A successful IPO will see Kalyan Jewellers joining listed peers Titan Company Ltd, Tribhovandas Bhimji Zaveri Ltd, Rajesh Exports Ltd and Shree Ganesh Jewellery House Ltd. 

Delhi-based PC Jeweller Ltd was the last branded jewellery firm to go public, in December 2012, with a Rs 609 crore IPO.

Another jewellery firm Nakshatra World Ltd, promoted by Gitanjali Gems Ltd, was looking to go public and had filed its prospectus with SEBI. However, it failed to take off owing to a fraud at Punjab National Bank even though it had received regulatory approval.

Two other companies, SAIF Partners-backed Senco Gold Ltd and PN Gadgil & Sons Ltd failed to launch their offerings after filing their draft proposals with SEBI.

Founded in 1993, Thrissur, Kerala-headquartered Kalyan Jewellers is one of the largest jewellery manufacturing and distribution companies in the country. It had a network of 107 showrooms in India and 30 outlets in West Asia as of June 2020.

It designs, manufactures and sells a wide range of gold, studded and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery. The firm has five sub-brands for gold jewellery and seven sub-brands for diamonds jewellery.

India operations accounted for a little more than 78% of its revenue, while the West Asia region contributed 21.81%.

Its total showroom count increased to 137 as on June 2020 compared with 77 as on March 2015. When Warburg invested Rs 500 crore in 2017, the company aimed to double its store-count in two years.

In addition to bricks-and-mortar stores, Kalyan Jewellers sells its products through its online platform Candere, a company it acquired in early 2017 to augment its online presence following the footsteps of bigger rival Titan.

Tata Group’s Titan had acquired a majority stake in CaratLane.com in 2016 by buying out US hedge fund Tiger Global Management.

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