Gitanjali Gems to buy US chain for $40 mn
Gitanjali Gems, an integrated diamond and jewellery manufacturer, is buying a US-based jewellery retail chain, comprising 100 stores in line with its plans to increase retail operations, sources said.
By Nishanth Vasudevan, TNN |
MUMBAI: Gitanjali Gems, an integrated diamond and jewellery manufacturer, is buying a US-based jewellery retail chain, comprising 100 stores in line with its plans to increase retail operations, sources said.
The buyout size, estimated to be around $40m, will be financed to the extent of $23-25m through equity and rest via debt and internal accruals, they said.
“We are in advanced stages of talks with a US jewellery retail chain, which is among the top 10 in the US and has a turnover of over $100m. We expect to conclude the deal in two months,” said GK Nair, Gitanjali Gems’ director (finance). He, however, declined to name the company and size of the proposed acquisition.
This acquisition is part of its growth strategy, which includes expanding its share in major global markets including India.
“We are concentrating on retail (jewellery) sales in the US, India and China. We plan to grow through JVs, buyouts and organic expansion,” Mr Nair said, adding that China will be their next target market.
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Earlier, the company, which deals in brands like Asmi, Gili and Ginatti, D’damas and Nakshatra, had indicated that it plans to grow its retail chain to roughly 900 outlets from the existing 620.Industry analysts said jewellery companies are increasingly looking at venturing into overseas retail markets, especially the US, mainly because of the organised nature and higher margins in the business there. Accordingly, growth through acquisitions and JVs would be the more preferred route for expansion for these companies in the future due to the higher costs involved for setting up the operations.
US diamond jewellery sales are believed to account for 50% of the global diamond jewellery sales. In the US, diamond jewellery sales comprise 55% of total jewellery sales.
But most feel growth opportunities in India remain the highest, given that the country accounts for roughly 18-20% of the global gold demand.
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“Though the opportunity in India is huge, the disincentive here is that the retail jewellery market is not yet organised,” said an analyst. Start a SIP with as low as ₹500 with ET Money App!
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