Warburg Pincus picks up minority stake in Kalyan Jewellers for Rs1,200 crore - Livemint

The investment by Warburg Pincus in a brick and mortar jewellery chain comes at a time when most private equity firms are pumping money into online jewellery stores.

Mumbai: Warburg Pincus Llc has invested $200 million (Rs.1,200 crore today) in Kerala-based Kalyan Jewellers for a minority stake, the two companies said in a joint statement on Monday. Kalyan will use the proceeds for expansion.

Founded in 1993, the jewellery chain has 61 stores across India and the United Arab Emirates and has brought in veteran superstar Amitabh Bachchan and his daughter-in-law and filmstar Aishwarya Rai Bachchan to endorse the brand.

“The company plans to enhance the number of exclusive outlets in existing markets and also foray into newer regions with emphasis on the North and the West of the country,” said T.S. Kalyanaraman , chairman and managing director, Kalyan Jewellers. The company will also be looking to add 28 new outlets in the next six months, Kalyanaraman stated.

Stake talks have been on for some time, with almost all PE firms pitching at one time or another. The appeal is to help the company grow from Rs.10,000 crore revenue to Rs.20,000 crore in three years. The company has said it will launch an initial public offering (IPO) once revenue touches Rs.20,000 crore.

Apart from enhancing its distribution network, Kalyan will also be increasing its product portfolio. At present, the firm offers gold, silver, diamond and platinum jewellery. “Company’s customer centric approach will be enhanced by offering more choices in the bespoke design segment and strengthening its ability to offer affordable studded jewellery to the consumers,” Kalayanaraman said. The firm has about 2 million members under its customer loyalty programme.

The investment by Warburg Pincus in a brick and mortar jewellery chain comes at a time when most private equity (PE) firms are pumping money into online jewellery stores. In September Ratan Tata , chairman emeritus, Tata Sons Ltd , invested an undisclosed amount in BlueStone.com . In March, Bluestone received about $10 million from Kalaari Capital, Accel India and Saama Capital.

Another firm, Caratlane.com , has raised about $20 million from Tiger Global since 2012.

According to Venture Intelligence, a deal tracker, no PE investment has gone into an Indian brick and mortar jewellery store since 2008. Credit Suisse PE Asia Investments (Mauritius) Ltd invested about $21 million in Shree Ganesh Jewellery House Ltd in March 2008. Other offline jewellery firms that have received PE funding include Vaibhav Gems Ltd and OyzterBay.

“Warburg Pincus’s investment in Kalyan Jewellers is the largest private equity investment into the jewellery industry in India, and is an acknowledgment of the company’s highly-talented team, its pioneering role within the industry, and its commitment to the highest levels of customer service,” Vishal Mahadevia , managing director and co-head, India, Warburg Pincus, said.

The US-based private equity firms established in 1966 has invested about $50 billion in 720 companies across the world.