
Warburg Pincus gets approval for $191m India jeweler deal – update
Warburg Pincus has won approval from the Competition Commission of India (CCI) to purchase of a 24% stake in Kaylan Jewellers for $191 million.
According to a CCI statement, the GP is making its investment via Highdell Investment, a vehicle domiciled in Mauritius.
Kalyan was set up in 1993 by T.S. Kalyanaraman and is headquartered in the southwestern region of Kerala. The company sells gold, silver, platinum and diamond jewelry and has 55 outlets across India and a further six in the United Arab Emirates.
Following the investment Kaylan plans to increase the number of outlets in existing markets as well as move into newer regions in the north and west of the country. It also plans to expand its global presence in the Middle East (Qatar and Kuwait) and in Southeast Asia (Singapore and Malaysia). In total it plans to open 28 new outlets over the next six months.
Warburg Pincus claims the deal is the largest ever private equity investment in India's jewellery industry.
The GP previously invested in Jaipur-based Vahibhav Gems in 2005, exiting its 28% holding at a considerable loss six years later to a group of high-net-worth individuals. The selling price was INR184 million ($3 million) against an estimated purchase price of $2.47 billion.
However, PE investors are still drawn to an industry tipped for rapid growth. According to a recent report by the Federation of Indian Chambers of Commerce and Industry (FICCI), the domestic gems and jewelry industry had a market size of INR2.51 trillion in 2013, with a potential to grow to INR5-5.3 trillion by 2018.
Kaylan is the industry's second PE investee this month, following SAIF Partners' commitment of INR800 million to Senco Gold, a Kolkata-based maker of handcrafted jewelry.
AVCJ Research data show that Warburg Pincus has made four India investments so far this year. In May, the GP paid $119 million for a 25% stake in Laurus Labs, an Indian active pharmaceutical ingredient manufacturer.
Prior to that, it bought stakes in two non-banking financial companies (NBFCs). A 25% stake in Capital First was acquired for INR1.29 billion in March and then the PE firm joined a consortium that paid $21 million for an undisclosed stake in Au Financiers.
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