Joyalukkas nearing investment deal with UAE-based PE fund

KOCHI: Private Equity (PE) funding is a trend that is fast catching up even in the southern-most state of Kerala now, as large number of small-to-medium sized entities including hospitals, industries, and of late, NBFCs, are getting enquiries from fund groups in other Asian markets seeking equity investments.

Joyalukkas Group, one of the country’s oldest and well-established retail jewellery groups with operations spread over 11 markets including India, New York, London and GCC, is the latest in the line-up seeking private equity financing.

The company’s finance head said Joyalukkas is seeking funding to accelerate its expansion plans in India as well as new overseas markets by establishing stronger branch presence.

Talking to, Joy Alukkas (seen in the picture), the managing director of the group, said though the group is getting investment enquiries from different quarters, a Dubai-based investment bank has been entrusted with the job of talking and finalising on the appropriate investment strategy for the group.

According to sources, the investment bank is in advanced talks with a few UAE-based private equity (PE) funds, which would be more than comfortable to fund Joyalukkas that has carved out a reputation for itself in the GCC over the years.

However, the Joyalukkas officials said it was too early to share more details on the PE deal as regards the extent of investment and other vital terms including the tenure of investment.

Though all the three leading jewellery brands from Kerala- Joyalukkas, Kalyan Jewellery and Malabar Gold & Diamonds had made headlines on IPO plans at different times in the past, none has yet gone public or got listed as the markets remained unfavourable all along since then.

While Kalyan received equity investment to the tune of 30 per cent in phases from Highdell Investment Ltd (Warburg Pincus Group) incrementally over the past few years, Malabar Gold and Diamonds (MGD) embraced a unique and successful model to establish their outlets.

While each MGD branch within India has been established as a separate entity controlled by a distinct group of investors, the GCC ownership model is structured differently with the whole operations owned by the same group of investors.

Among the major Indian jewellers, Joyalukkas has been the first to make a foray into the GCC market, and the group currently runs close to 160 branches globally and has generated a turnover of about Rs13,000 crore and a net profit of about Rs400 crore last year.

Joy Alukkas didn’t mince his words while briefing on the present business scenario for the industry. “The growth has been flat for retail jewellers for the past two years and this has in fact, given us an opportunity to curb expenses and enhance operational efficiency,” Joy Alukkas said.

ICRA has observed that the jewellery retail industry has been witnessing increased regulatory intervention. “This has impacted the operating environment and consequently the performance of jewellers, over the last few years,” it stated.

Stating that gold jewellery retail business is highly fragmented and competitive, the rating agency added that the pricing flexibility of most of the players remains under pressure with subdued demand growth across the industry.





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