International Gemmological Institute (IGI) India, a leading certification and accreditation service provider, has filed preliminary papers with the Securities and Exchange Board of India (SEBI) for a significant initial public offering (IPO) aimed at raising Rs 4,000 crore. This move is poised to enhance the company's market presence and accelerate its growth strategy.

IPO Structure and Objectives

The IGI India IPO comprises two main components:

* Fresh Issue of Equity Shares: The company will issue new shares worth Rs 1,250 crore. This fresh capital is primarily intended for strategic acquisitions and operational expansions.

* Offer-for-Sale (OFS): The IPO includes an offer-for-sale of shares amounting to Rs 2,750 crore by the sole promoter, BCP Asia II TopCo Pte Ltd, an affiliate of funds managed by Blackstone. This portion allows existing shareholders to sell their stakes.

Use of Proceeds

The proceeds from the IPO will be allocated as follows:

* Acquisition of IGI Belgium and IGI Netherlands: A significant portion of Rs 1,100 crore will be used to acquire IGI Belgium and IGI Netherlands from BCP Asia II TopCo Pte Ltd. These entities are crucial as they operate the IGI business outside of India and Turkey, thereby expanding IGI’s international footprint.

* General Corporate Purposes: The remaining funds will be utilized for general corporate needs, supporting IGI India's ongoing growth and operational strategies.

* IGI India’s Market Position and Financial Performance

IGI India is the largest independent certification and accreditation services provider in the country, commanding approximately 50 percent of the market share in diamond, jewellery, and coloured stone certifications for the calendar year 2023. This dominant position underscores the company’s pivotal role in the industry.

* Financial Highlights for FY 2023: IGI India reported a net profit of Rs 324.7 crore, reflecting a substantial growth of 34.3 percent from Rs 241.76 crore in the previous fiscal year. This profit increase is supported by a strong topline and robust operating performance.

* Revenue and EBITDA: The company’s revenue from operations surged by 30 percent year-on-year to Rs 638.5 crore. Additionally, its EBITDA grew by 34.3 percent to Rs 450.1 crore, with a margin expansion of 220 basis points to 70.5 percent.

* Q1 FY 2024 Performance: For the first quarter ended March 2024, IGI India achieved a profit of Rs 124.8 crore on a revenue of Rs 209.1 crore, indicating continued strong performance into the new fiscal year.

IPO Management and Timeline

* Lead Managers: The IPO is being managed by a consortium of leading financial institutions, including Axis Capital, Kotak Mahindra Capital Company, Morgan Stanley India Company, and SBI Capital Markets. These firms are responsible for overseeing the offering and ensuring its successful execution.

* Pre-IPO Fundraising: Prior to the IPO, IGI India raised Rs 64.4 crore from anchor investors on August 19, which provided an early boost to the offering.

Conclusion

The upcoming IPO by International Gemmological Institute (India) represents a significant opportunity for investors, with a well-structured offering aimed at bolstering its market position and facilitating strategic growth. The combination of a substantial capital raise, strategic acquisitions, and robust financial performance positions IGI India as a compelling investment proposition in the certification and accreditation sector. As the company prepares for its public debut, the IPO’s success will likely enhance its competitive edge and support its global expansion goals.

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