Jewellery firm Rajesh Exports buys Valcambi for $400 million in cash

MUMBAI: Bengaluru-based jeweller Rajesh Exports has acquired Valcambi, the world’s largest precious metal refiner for $400 million in an all-cash deal. This is the first instance of an Indian company taking over an international gold and silver refinery.

On Monday, Rajesh Exports Chairman Rajesh Mehta announced that the company has bought out the stakes of US miner Newmont Mining Corporation and a group of global investors to own 100% equity in Valcambi, an unlisted Swiss company which has 60% of the world’s gold refining capacity.

Rajesh Exports borrowed from Credit Suisse and dip into internal cash reserves to fund the transaction. On July 1, ET had reported that Rajesh Exports was in talks to acquire stake in Valcambi.
“The deal will help us sustain high growth rate and offer synergies… It will also give us a global footprint. The deal is EPS accretive from day one,” said Mehta.



About 30% of the gold purchased by India, the world’s largest gold buyer, is refined by Valcambi. “Rajesh Exports plans to open a gold refinery in India under the name of Valcambi. The first plant should be ready in the next one to two years,” said Mehta. Valcambi changed hands as Newmont chose to focus on its core business of mining while individual investors were looking for an exit. Of the total refining capacity of 2,000 tonne, 1600 is used to refine gold and the balance for silver.

Gold bars made by Valcambi are accepted in commodity exchanges and most banks across the world. Valcambi’s annual revenues and operating profit, on an average of past three years, is about $38 billion (Rs 2,36,500 crore) and $33 million (Rs 205 crore), respectively. In 2014, it paid out 40% of its profits as dividend. Valcambi is debt-free with cash surplus of $150 million, said Mehta.

On sales of Rs 504,629 crore, Rajesh Exports’ profit after tax was Rs 655 crore in 2014-2015. The backward integration, according to Mehta, would increase the net profit margin of the existing business by 50 basis points from around 1.6%. Rajesh Exports shares surged 70% in the past one month. The stock closed 2.1% higher at Rs 540.1 on Monday when the Sensex fell 551 points (or 2%).