Nalanda Capital Pte Ltd, a Singapore-based private equity firm floated by Pulak Prasad has picked up a 14.9% stake in precious stones and jewellery maker Vaibhav Gems.
MUMBAI: Nalanda Capital Pte Ltd, a Singapore-based private equity firm floated by Pulak Prasad, former managing director of Warburg Pincus, the Europe-based private equity giant, has picked up a 14.9% stake in precious stones and jewellery maker Vaibhav Gems.
Of this, 9.9% stake was bought by Nalanda’s India Fund through global depository receipts, while 5% was through subscription of warrants.
The total transaction size, if warrants are exercised, will be about $35 million.
Warburg itself has 27% stake in the company.
Prasad, who made the famous investment in Bharti Airtel for Warburg, which resulted in profits in thousands of crore for the private equity firm, will get a slot on the Vaibhav board.
“We are very pleased to have Nalanda Capital on our board,” said Sunil Agrawal, chairman of Vaibhav Gems. “We look forward to their insights and expertise to take Vaibhav to the next level.”
The board had taken a decision to this effect at its meeting on October 12. Among other things, it had also approved the issue of warrants to Surawell Pacific Ltd.
Nalanda India Fund closed at $400 million in late May 2007.
“The team at Nalanda Capital feels that Vaibhav’s business model and recent expansions show promise for long-term growth and a wise investment for its fund as the company is well diversified and vertically integrated,” said Agrawal.
Vaibhav Gems has lately effected a marked change in its business model. Hitherto a jewellery supplier to global retailers, the company is reaching out to customers across the world directly through television and direct retailing.
It has expanded over the past several years to include jewellery shopping channels in the UK, Germany and the US, 19 retail stores in Caribbean and Mexico, its own manufacturing units in India, Thailand and China and a wholesale operation.
In 2005, it acquired New York-based STS Jewels and its subsidiaries, which have continued to expand products and territories.
The company aims to ramp up the store count to 30 by FY10.
The management declined to comment, citing earnings season restrictions.
While the global jewellery market is expanding at 3-4% annually, sales through direct channels are growing at a much faster pace. In key geographies like the US and UK, electronic sales already account for over 10% of the overall jewellery sales.
Chirag Shah and Ritesh Shah, analysts at SSKI Research, said in a note to clients on September 26 that Vaibhav would grow at 15-20% per annum over the next two years.
Going forward, retailing and jewellery sales through TV channels are expected to record fast growth, with the high start-up costs getting offset by higher direct sales and increased premium on value added products, with no middlemen in the chain.
-With agencies
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