IGI today is very different from when we bought it 18 months ago: Blackstone MD Roongta

The primary proceeds will be used by the IGI to acquire certain overseas businesses, which are currently owned separately by IGI India’s promoter Blackstone.

International Gemmological Institute (IGI) India has seen a major transformation in the last 18 months, Blackstone Managing Director Prateek Roongta told Moneycontrol, explaining the over a three-time jump in the valuation of its IPO-bound portfolio company.

The IGI initial public offering (IPO) values the company at Rs 16,545 crore ($1.95 billion), up from $570 million in May 2023. On December 9, the Blackstone-owned company announced a price band of Rs 397-Rs 417 a share for its Rs 4,225-crore offer, which opens for subscription on December 13.

“That's (the valuation) what the investors and bankers have arrived at. I would just say that this company today is not the same company that we bought. And a lot has happened in the last 18 months. One, we have consolidated 10 standalone offices into one IGI and that itself is a big value unlock,” Roongta said.

IGI is the largest independent certification and accreditation services provider of natural diamonds, laboratory-grown diamonds, studded jewellery and coloured stones. It also offers educational programmes.

He added that Blackstone has significantly enhanced the management team of IGI with several appointments including a new CFO, a global CHRO, a global CMO and new country managers in UAE and USA.

Blackstone made significant investments in brand building and also appointed international auditors.

“The company is totally transformed. So to compare what we bought versus what we're selling is not fair, in our opinion,” Roongta said.

IGI India held approximately 50 percent market share of certifications of diamonds, studded jewellery and coloured stones in 2023. As of September 30, 2024, IGI India has 19 laboratories in India and 1 in Türkiye, which offers certification services.

"This is a remarkable achievement for IGI and couldn’t have come at a better time. In less than two years, we have helped solidify IGI’s position as a global leader in the certification of lab-grown diamonds and an increasingly competitive player in other segments,” said Mukesh Mehta, senior managing director, Blackstone.

The IPO 

The IPO includes a primary fundraising of Rs 1,475 crore and a secondary sale of shares by Blackstone aggregating to Rs 2,750 crore.

IGI will use the primary proceeds to acquire overseas businesses that are owned separately by Blackstone.

These include IGI Belgium and IGI Netherlands held by a Blackstone entity. After the acquisition, IGI India will be responsible for IGI business globally.

While earlier Blackstone was planning to use only Rs 1,100 crore of the primary proceeds for the acquisition of the overseas businesses, it is now planning to use Rs 1,300 crore.

The size of the primary offering has been increased from Rs 1,250 crore in the draft red herring prospectus (DRHP) to Rs 1,475 crore in the RHP to facilitate this change in plans.

Roongta said the company was earlier planning to tap into its cash reserves for partly funding the acquisitions, as the company was cash-rich.

“As a result of all the strategic discussions we had, we realised that we have to invest in brand building and technology. That's why we are not dipping into the company's cash reserves and using primary proceeds for the acquisition and maintaining the company's cash reserves,” he said.

“In fact, we are launching a country-wide branding campaign this week and we expect to invest a lot of money in branding and marketing. We are also looking at investing money in technology and AI, and that's why we don't want to deplete the company's cash reserves,” he added.

This will be the first such marketing campaign by IGI in India, focusing on end consumers to create awareness about the IGI brand, IGI managing director and CEO Tehmasp Printer said. The company will also invest in marketing campaigns in the US.

On the acquisitions of overseas entities, Roongta said they would help reduce the number of related-party transactions that would have otherwise complicated the company’s financials and regulatory disclosures.

“IGI US works with IGI India in terms of transferring customer orders and then the certification happens here in India. Thus, a listed business would have been working with an unlisted business and a lot of related party disclosures would have to be made. That's why we felt it was best to consolidate everything under the listed entity,” he said.

For the nine months ending September 30, IGI India recorded a revenue of Rs 619.4 crore, up from Rs 459.2 crore in the year-ago period. Profit came in at Rs 326 crore against Rs 238.6 crore last year.