The Rs 1,175 crore initial public offer (IPO) of Kalyan Jewellers, scheduled to launch tomorrow, will reduce stake of global private equity firm Warburg Pincus in the pan-India gold retailer from 32 per cent to 24 per cent, and the promoter family of TS Kalyanaraman, chairman and managing director, will retain a controlling stake of 61 per cent in the company.
The US-based Warburg Pincus, which has over $58 billion in assets under management globally, had invested Rs 1,700 crore in the Thrissur-based family-run business in two tranches - Rs 1,200 crore in 2014 and Rs 500 crore in 2017 for a 32 per cent stake. While the promoter group of TS Kalyanaraman will sell shares worth Rs 125 crore, Highdell Investment, a Warburg Pincus firm, will offload Rs 250 crore worth of shares in the IPO.
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Warburg Pincus's investment in Kalyan in 2014, then a Kerala-Tamil Nadu predominant regional player, was among the first large-scale investment by a global private equity business in India's largely unorganised gold retailing industry. The funds and professional management support with a board seat helped Kalyan spread its wings across India with 107 showrooms and 30 in the Middle East, besides creating brand visibility with celebrity advertising.
As per the company disclosure, about Rs 800 crore from the IPO proceeds are for enhancement of working capital requirements. Sources say Kalyan spends about Rs 35-Rs 40 crore on each of its showrooms. The proceeds could be used for setting up another 20-25 showrooms, primarily in non-metro North Indian cities. The company also has a debt of Rs 3,500 crore at 1:17 debt to equity ratio.
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