Private equity firms eye stake in Gitanjali group firms

Gitanjali Gems Ltd, is reported to be in talks to raise around $100 million from the stake sales to cut debt, with private equity firms Bain Capital, International and Apax Partners said to be in the race to acquire stakes in Gitanjali Group's subsidiaries according to a financial daily.

The reports say the stake sale forms part of a restructuring exercise within the group and could involve hiving off one of the one of the business units of the company.

The company's shares are currently trading at Rs318.30 up Rs3.95 or 1.26 per cent higher than the previous close with the total traded quantity on NSE at 4,82,147 shares.

The Gitanjali Group has a presence in diamond, jewellery, retail and infrastructure sectors. The group owns several renowned jewellery brands including Nakshtra, Gilli and Asmi.

According to analysts, the stake sale would help the company reduce its debt burden which has, of late been hurting its financial position. They add that the company's leverage is a bit on the higher side with interest costs too running high.

The group underwent rapid expansion over the last five years, partly through acquisitions in US and India, however, its US acquisitions boomeranged with the economy slipping into its worst recession in 2008 since the Great Depression in 1929.

US diamond jewellery sales contributed around 50 per cent of the global diamond jewellery sales before 2008.