Daily News
Kalyan Jewellers’ promoters to raise Rs.2,500 Crore in debt to increase equity stake
![Kalyan Jewellers' promoters to raise Rs.2,500 Crore in debt to increase equity stake](https://retailjewellerindia.com/wp-content/uploads/RJIndia-Website-Cover-image-1200-X-675px-Aug-2024-Kalyan-Jewellers.jpg)
The development follows Highdell Investment’s plan to sell 2.36% of Kalyan Jewellers’ share capital to the promoter at Rs.535 per share, totaling Rs.1,300 crore
Mumbai: Kalyan Jewellers India’s promoters, led by Trikkur Sitarama Iyer Kalyanaraman, are seeking to raise Rs.2,000-2,500 crore through high-yield debt in a bid to enhance their equity stake in the company. The promoters are in advanced discussions with financial institutions Motilal Oswal and 360 One to secure the necessary funding, which will partly be used to acquire shares from Warburg Pincus.
Sources familiar with the negotiations reveal that Kalyan Jewellers’ promoters are considering authorising one or both of the institutions to facilitate the debt raise. The funds will enable them to increase their holdings in the jewellery retailer.
“The debt raise will be utilised in part to finance the acquisition of shares from Warburg Pincus,” an insider noted, requesting anonymity. The high-yield debt is anticipated to be priced between 13.5% and 14%, with shares pledged as collateral at a coverage ratio of 2.5 times.
The current share price of Kalyan Jewellers, which stood at Rs.616 on Monday, could impact the collateral requirements. If the stock price falls, additional shares may be needed to maintain the pledge, while a drop of over 35% would necessitate cash collateral. A decline exceeding 45% could trigger compulsory bond redemption.
Last week, an affiliate of Warburg Pincus, Highdell Investment, disclosed plans to sell 2.36% of Kalyan Jewellers’ share capital to the promoter at Rs.535 per share, totaling Rs.1,300 crore. This transaction enables the promoter to potentially increase their stake by about 5% with the planned Rs.2,500 crore fundraising.
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