Mumbai: Blackstone said on Sunday it has acquired International Gemological Institute (IGI) from China’s Fosun and Roland Lorie, part of the founding family, for an undisclosed sum. Sources in the know said Blackstone is paying $570 million as enterprise value for the company, inclusive of debt.
ET first reported this deal on May 18.
Founded in 1975 in Antwerp, IGI is a global leader in the independent certification of diamonds, gemstones and jewellery, with a global footprint of 29 laboratories and 18 schools of gemology across 10 countries. Since 2005, IGI has pioneered the certification of lab-grown diamonds (LGDs), a rapidly growing industry. It is the largest certification player globally for LGDs and second-largest for natural diamonds. India is one of the largest geographies for IGI.
Investing in Diamonds 2.0
International Gemological Institute is a zero-debt company, with net cash of $35 million on its books. Fosun held 80% in the company, while the rest was held by the Lorie family.
The investment thesis is based on the strong tailwinds of increasing acceptance of lab-grown diamonds. The global LGD retail market is currently $7 billion and has grown at 15% CAGR over CY19-22A.
These synthetic diamonds are identical to natural diamonds but are priced lower, environment-friendly and conflict-free, which has driven consumer adoption of LGD in the US, especially among millennials.Globally, G7 countries are trying to impose fresh sanctions on Russian-mined diamonds that are polished and processed largely in Surat, a hub that dominates 90% of the trade, following the Ukraine war.
LGD emerged as a category only in late 2017, with advances in production technology. As LGD production technology continues to improve, prices will continue to decline and consumers will get to buy larger stones.
Globally, natural diamond jewellery retail sales are a near $80-billion market, growing at 3% CAGR. Between IGI and GIA, another diamond certification agency based in Europe, the market is a duopoly.
“As more customers choose certification of jewellery, IGI has spearheaded the certification of natural diamonds, lab-grown diamonds and coloured stones, becoming a global market leader and providing confidence to manufacturers, retailers and consumers around the world,” said Mukesh Mehta, senior managing director, Blackstone Private Equity Group.
IGI has 18 gemology labs in India. The majority of IGI’s revenue and profits are from Indian operations. It has a leading market share in the certification of natural diamonds and jewellery sold in the Indian retail market, as well as lab-grown diamonds manufactured in India and typically sold to the US retail market.
“IGI’s business is more diversified and solid, with a more globalised landscape. We believe it is about to embark on a new journey of rapid growth with Blackstone’s global synergy,” said Kevin Shikun, co-chief investment officer of Fosun.