Warburg Pincus-Backed Kalyan Plans Biggest Indian Jeweler IPO
While expenditure on gold will be subdued this year due to the pandemic, its long-term appeal remains intact.
(Bloomberg) -- Kalyan Jewellers India Ltd. plans to raise as much as $235 million, making it the largest initial share sale among Indian jewelers, as it pins its hope on gold’s long-term allure overriding a coronavirus-induced dip in demand in the world’s second-biggest consumer.
The Warburg Pincus LLC-backed company plans to raise about 17.5 billion rupees, of which 10 billion rupees will be through a fresh issue of shares and 7.5 billion rupees from the sale of equity by existing investors, it said in a draft prospectus to exchanges.
While expenditure on gold will be subdued this year due to the pandemic, its long-term appeal remains intact as cultural norms dictate the metal’s wide-spread use during Indian weddings and as an investment option, Kalyan said. About 10 million weddings take place in India every year, creating demand for as much as 400 tons of gold and the young age profile of the country will sustain the growth, it said.
Started in 1993 by T.S Kalyanaraman in Kerala, the jeweler had an income of 102 billion rupees in the financial year ended March, it said. Kalyan has 107 stores in India and 30 showrooms in the Middle East.
Organized jewelers have a 32% share of India’s $64 billion jewelry retail sector, while standalone, smaller stores make for the rest, it said citing Technopak Advisors Pvt.
“On the demand side, consumers’ desire for a safer shopping experience with more space, well-trained store personnel,” will benefit jewelers like Kalyan, it said.
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