Kerala-based Kalyan Jewellers, a leading jewellery retailer backed by bulge-bracket private equity fund Warburg Pincus, is likely to launch its much-anticipated IPO (initial public offering) on March 16, sources with knowledge of the matter told Moneycontrol.

India is the world’s biggest market for yellow metal, and if plans fructify, this would be the first listing by a pure-play jewellery player in the last eight years. Rival PC Jeweller had opened its Rs 600-crore IPO in December 2012.

Moneycontrol was the first report on the filing of the DRHP ( draft red herring prospectus) by Kalyan Jewellers on August 24, 2020, and had also reported the revival of the jeweller’s listing plans on August 1, 2020.

“The plan is to launch the deal on March 16. There is likely to be a reduction in the final size of the IPO, from the original Rs 1,750 crore mentioned in the DRHP to around Rs 1,175 crore,” said one of the individuals cited above.

“As per the revised plan, the primary issue is likely to be around Rs 800 crore and the offer for sale component is likely to be for Rs 375 crore,” added a second individual.

The pent-up demand in the domestic wedding calendar has led to Kalyan Jewellers doing very well since December in terms of month-on-month sales. Once the COVID-19 uncertainty is set aside, the outlook looks good for the firm. This would have contributed to the OFS component being reduced in anticipation of better returns at a later stage,” elaborated the third individual.

“The listing will facilitate a partial exit for Warburg Pincus and the proceeds will be utilised for working capital, store expansion and debt reduction,” a fourth individual added.

All four individuals spoke to Moneycontrol on the condition of anonymity.

In response to an email query from Moneycontrol, Kalyan Jewellers declined to comment. Moneycontrol is awaiting an email response from Warburg Pincus and will update this article as soon as we hear from the firm.

According to the DRHP, the global co-ordinators and book running lead managers (GCBRLMs) to the IPO are Axis Capital, ICICI Securities, SBI Capital Markets and Citigroup Global Markets India. The book running lead manager (BRLM) to the IPO is BOB Capital Markets. Law firm AZB & Partners is the counsel to the company, Khaitan & Co is advising the investment banks and Warburg Pincus is being advised by Cyril Amarchand Mangaldas.

In the last one month, the shares of listed peers of Kalyan Jewellers like Vaibhav Global and PC Jewellers have risen by 29 per cent and 10 per cent, respectively. On the other hand, shares of Titan and Renaissance Global have slipped by 5 per cent and 31 per cent, respectively.

In recent weeks, gold prices have fallen from the record highs of Rs 56,200 in August last year. Jewellery retailers are hoping for consumers to hit the showrooms with the onset of the summer wedding season and the festival of Akshaya Tritiya in May.

Know your jeweller

Warburg Pincus has collectively invested around Rs 1,700 crore in two tranches in Kalyan Jewellers. Its initial investment of Rs 1,200 crore in 2014 was the biggest private equity investment ever in the jewellery sector in India, followed by a second smaller round of Rs 500 crore in 2017. It holds a 24 per cent stake in the firm.

Kalyan Jewellers was established by its founder and one of the promoters, TS Kalyanaraman, who has over 45 years of retail experience, of which over 25 years is in the jewellery industry. The company started its jewellery business in 1993 with a single showroom in Thrissur, Kerala.

It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and also has an international presence with 30 showrooms located in the Middle East as of June 30, 2020. All of its showrooms are operated and managed by the company. In Fiscal 2020, revenue from operations of Kalyan Jewellers stood at Rs. 10,010 crore of which 78.19 per cent was from India and 21.81 per cent from the Middle East. Kalyan Jewellers also sells jewellery through its online platform at www.candere.com.