Warburg Pincus picks up minority stake in Kalyan Jewellers for R1,200 crore

The jewellery firm, which has 61 exclusive outlets (including six in the United Arab Emirates), plans to open 28 new outlets in the next six months.

TS Kalyanaraman, chairman and MD of Kalyan Jewellers, believes the 28 new stores would increase the firm’s distribution reach by 40 per cent and contribute significantly to revenues. “We are expecting to clock Rs 10,000 crore in revenues this fiscal and Rs 25,000 crore in the next three years. This investment of Rs 1,200 crore along with internal accruals and a bit of borrowing from banks would be sufficient to fund growth for the next couple of years,” said Kalyanaraman.

The company also plans to scale up presence in the Middle East and South Asia by foraying into new countries like Kuwait, Qatar, Singapore and Malaysia.

For Warburg Pincus, this would be its third fresh investment since May 2014. It had bought 32.3 per cent in Laurus Labs for $150 million in May 2014, followed by putting $30 million (along with Tiger Global and Canaan Partners) in online portal CarTrade.com last week.

Though the firm has not officially disclosed the acquired stake, Warburg, through its affiliate Highdell Investment, had last week received approval from the Competition Commission of India (CCI) to pick up to 24 per cent of equity share capital on a fully diluted basis.

“Further, as per the SHA (shareholders’ agreement), Highdell would also acquire certain affirmative and veto rights on certain key business decisions,” the CCI had noted in its order dated October 13, 2014 while approving the deal.

S Subramanian, managing director at Axis Capital —which acted as financial adviser to Kalyan — believes the investment by Warburg reinforces the trust in the Kalyan Brand name and will act as a fillip for the entire industry.

Currently, organised jewellery retailers in India (national and regional) command around 20 per cent share of the Rs 2,50,000 crore domestic gems and jewellery market, according to global consulting firm AT Kearney. FE