PE-backed Kalyan Jewellers files for $235m IPO
Indian jewelry retailer Kalyan Jewellers, which counts Warburg Pincus among its investors, is looking to raise INR17.5 billion ($235.7 million) through a domestic IPO.
The company plans to raise INR10 billion in fresh capital while Warburg will sell INR5 billion worth of shares, according to a prospectus. The pricing of the shares on offer will be determined at a later date. Founder T.S. Kalyanaraman and other members of his family are expected to retain a majority shareholding.
Warburg Pincus committed INR5 billion in a funding round in 2017, adding to an earlier investment. It holds a 24% stake in the business.
Kalyan says it needs money to support rising working capital needs. It has already taken bank loans and moved to curb costs after operations were affected by a two-month closure of all showrooms earlier in the year due to the COVID-19 pandemic. Domestic sales contributed more than 78% of revenue in the most recent financial year.
Kalyan started out in textile retailing and wholesaling before opening its first jewelry showroom in Kerala in 1993. It now sells gold, silver, platinum and diamond jewelry through 137 outlets in India and the Middle East, and also operates an online shopping portal. More than half of its showrooms are situated in south India.
Technopak, an Indian market research firm, estimates that organized retail comprises just 32% of India's jewelry market. Industry sales reached $64 billion in the 12 months ended March. Other listed companies that sell jewelry products in the country include Titan, Vaibhav Global and Renaissance Global.
Kalyan revenue came to INR101.8 billion in 2020, up 3.7% year-on-year. Net profit was INR1.4 billion compared to a loss of INR48.6 million in 2019. The company expects the "wedding season" to spur a recovery. This is a six-month period, starting in September, that usually sees a rise in the number of weddings in north India for astrological reasons.
Other PE-backed companies that have considered domestic IPOs this year include Barbeque Nation and Happiest Mind Technologies. They have yet to list. Progress has been muted due to an uncertain economic outlook, with SBI Cards the only notable PE-backed offering of 2020.
VC-backed online jewelry portals that compete with Kalyan include Bluestone and Caratlane. The latter was acquired by jeweler and watchmaker Titan last year.
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