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Warburg Pincus Invests in Kalyan Jewelers

The funds are to be used for expansion of Kalyan Jewelers

India: United States based private equity firm, Warburg Pincus, has agreed to invest USD76.9 million in Kalyan Jewelers, taking its total commitment to the Kerala based gold retailer to USD261.54 million. The second round of investment comes at a time when the company is looking to grow its distribution network exponentially in India and expand its overseas operations, Kalyan said in a statement.

The transaction would mark Warburg Pincus' second and final round of investment in Kalyan Jewelers ahead of the jeweler’s proposed public issue, expected to hit the markets next year. In 2014, Warburg had invested USD184.61 million to pick 10% stake in Kalyan Jewelers and that was the single largest investment in the jewelry sector of the country. The funds would be used for Kalyan's expansion plans within and outside the country.

According to TechSci Research, as the gems and jewelry market in India is highly competitive, the investment is set to benefit the Kalyan Jewelers, as the company is betting on expansion plans to increase its market share in India against other major players.

According to a report published by TechSci Research, India Gems and Jewelry Market By Product Type, By Point of Sale, By Organized vs. Unorganized, Competition Forecast and Opportunities, 2011-2021”, gems and jewelry market in the country is projected to grow at a CAGR of around 11% during till 2021. The anticipated growth in market can be attributed to fluctuating gold prices in India, opening of exclusive showrooms, selling jewelry through online retail space and tie-ups with online vendors such as flipkart, amazon, etc., to facilitate easy sale and supply of gems and jewelry to end customers. Demand for gems and jewelry is predominantly concentrated in the southern region of India because of aggressive marketing strategies adopted by companies and increased brand consciousness along with rising disposable income of people in the region.

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