Another big-ticket buyout could be on the cards. A US-based buyout fund and diamond industry giant De Beers are learnt to have evinced interest in jewellery maker and retailer Rajesh Exports for acquiring 51% stake from its promoters.
According to industry sources, while the suitors are yet to make a formal bid, the separate offer by both parties will be to acquire majority control at a premium to the current market price of the listed firm.
The market capitalisation of Rajesh Exports is currently at Rs 2,650 crore. The share price of the company went up by 12.4% last week to close at Rs 729.50 on BSE on Friday. An acquisition of 51%, if it goes through, will also trigger a mandatory open offer for an additional 20% of the company.
It remains to be seen whether the promoters, who hold 61.5% in the company, agree to sell. When contacted by ET, Rajesh Exports’ chairman Rajesh Mehta said: “I have no comments to make on any such offers. I can only say that we recently attended an investors’ conference in the US and there is a lot of interest from FIIs in the company.”
Despite repeated attempts, De Beers India country head Rajiv Bhandari could not be contacted for comments and an email query sent to him failed to elicit any response. The media contact person for De Beers Diamond Jewellery was unavailable for comment.
An industry source said the De Beers move is linked to its interests in jewellery retailing in India. While De Beers is primarily known for the diamond business, Rajesh Exports is predominantly into gold jewellery and is just about entering the diamond space. “The fact is, India is more of a gold market and any serious jewellery player cannot expect to be big by concentrating only on diamonds,” a source said.
The Bangalore-based Rajesh Exports shot into the limelight in 2004 when its revenues jumped more than 13 times in a single year to close at about Rs 3,000 crore.
This was due to the commissioning of its new Bangalore-based manufacturing unit, the world’s largest jewellery making unit. The market capitalisation of the company too has shot up from just about Rs 43 crore in FY03 to Rs 2,650 crore now.
A reason for rising valuations of the company is linked to the forward integration in the jewellery business. Traditionally, the company has been a wholesale gold jewellery maker and exporter, which is a low-margin business.
While exports continue to comprise a substantial part of the revenues, the company has also recently moved into the front end with its jewellery retailing business. It has opened a chain of 30 stores under the Laabh brand in the metros. In addition, the company is in the process of unveiling a jewellery chain under the Shubh brand, which would be located in smaller cities and towns.
Source: Economic Times