Jewelers increasingly turning towards Equity Funding route

Finance is a critical factor in the success of jewelry business and most of the jewelers have traditionally relied on Debt Financing through bank loans, private financing etc. But lately, many banks have either shied away or tightened their purses to jewelry industry. However, several jewelry businesses globally are increasingly turning towards Equity Funding for their financing needs.

Recently, an India-based jewelry retail chain – Kalyan Jewellers raised close to USD 200 Million (INR 1,200 Crores) from local arm of US Private Equity (PE) player Warburg Pincus, for an unconfirmed 10-12% stake. The company plans to use this funding to expand its retail presence locally and in international markets.

The latest to join the PE funding bandwagon is Singapore-registered Jewelry Ecommerce venture – Orori. The company whose primary market is Indonesia raised a seven-figure funding (actual amount undisclosed) from a group of investors led by VC firm Ideosource.

In 2014, numerous jewelry businesses globally have raised funding through PE/ VC/ Angel Investment route. Here is a snapshot of some of those deals.

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Many of these targets are either Online Ecommerce Jewelry ventures or new contemporary jewelry businesses like 3D printed designer jewelry, fashion jewelry etc. Online jewelry retailers – US based BaubleBar and India based BlueStone have each raised USD 10 Million this year from series of investors. BlueStone, the Indian competitor of BlueNile (world’s largest online retailer of certified diamonds and fine jewelry), also received investment from TATA Group Chairman Emeritus – Ratan Tata.

In a McKinsey report – ‘A multifaceted future: The jewelry industry in 2020’, it is pointed out that online jewelry sales though account for only 4-5% of the market today, may reach to 10% for fine jewelry and up to 15% for fashion jewelry by 2020.

Nevertheless, the physical jewelry retail chains are not far behind. After the big-ticket deal of Kalyan Jewlers, many PE funds are actively scouting for targets in the jewelry industry, indicating possibility of more such similar deals in near future.

 

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