Global private equity funds take a shine to international gem institute

Mumbai: Blackstone, CVC Capital Partners and Goldman Sachs are among several bulge-bracket global private equity funds weighing bids to buy a controlling stake in the International Gemological Institute (IGI) in a deal that could value the world's biggest independent diamond-grading firm anywhere between $250 million and $300 million, two people directly aware of the talks told ET.
Founded in 1975, the Antwerp-based IGI provides grading certifications for diamonds, coloured gemstones and jewellery for clients worldwide. IGI certifications are internationally accepted for both mined and lab-grown diamonds. India is the world's biggest diamond cutting and polishing hub, accounting for nine out of ten stones sold worldwide.

IGI Runs 20 Labs
Globally, IGI operates 20 laboratories that grade finished jewellery, natural diamonds, lab-grown diamonds and gemstones. It also runs 14 schools of gemology that train professionals in the diamond industry.

In 2018, China's Fosun International acquired 80% stake in the business, taking control of the company from its founders, the Lorie family of Belgium.


"Fosun has, however, decided to put the company on the block and a sell-side mandate has been given to Deutsche Bank," said the first person cited above. Fosun, one of China's largest conglomerates, is currently shrinking its balance sheet by slashing costs to bolster its finances.

Fosun told analysts in October that it is seeking to sell as much as $11 billion of assets within 12 months and as part of that process, is also looking to sell Indian pharmaceutical company Gland Pharma, which it acquired in 2017.

A mailed query sent to Fosun seeking further details of the transaction did not elicit any response until the publication of this report. Spokespersons for Deutsche Bank, Blackstone and Goldman Sachs Private Equity declined requests for comments. An email request for comments sent to CVC Capital remained unanswered.

"While it is a global mandate, it is expected that buying interest from India will be particularly strong as the country accounts for a large part of IGI's operations and client base," the first person added. "Therefore, it is extremely likely that the funds for the transaction, if it were to go ahead, would be drawn from India allocations of the private equity firms in the fray, and negotiations are being done by the India teams of the respective PE firms."

While the gems and jewellery industry has not attracted significant private equity interest in India in the past, experts believe that changing market dynamics such as shifting consumer preferences toward segments like studded jewellery and increasing dominance of organised brands are likely key drivers for a rise in demand for grading services.