US buyout fund Advent International is in advanced negotiations to pick up a controlling stake in Orra Fine Jewellery, owned by one of the country’s top diamond manufacturers and retailers, Rosy Blue Group, multiple people in the know said.

The proposed deal could value Orra at Rs 1,500-1,750 crore ($174-203 million), the people said, as it comes on the back of heightened interest among risk investors for the jewellery retail sector.

“Advent has been in exclusive discussions with Orra for more than a few months and is expected to take a controlling 51-75% stake. Dipu Mehta, the company’s managing director, will retain a small stake,” a person familiar with the talks told ET on condition of anonymity. “The private equity fund plans to take Orra public in a few years. Management and voting rights are being transferred to Advent as a part of the change of control.”

“Negotiations have moved to the documentation stage and a formal announcement is due shortly,” said an industry executive.

Founded in 1888 with design centres in Antwerp, Tokyo, New York, Hong Kong and India, retail brand Orra was launched in 2004 to sell diamond, gold, platinum jewellery through physical and online stores.

People familiar with the situation told ET that Orra has been seeking partners to infuse capital and grow the business in India and overseas, amid a larger disruption by new-age brands and lab-grown diamonds.

Dipu Mehta did not offer a comment on the deal, while Advent declined to comment, when contacted by ET.

Formerly a wholly owned subsidiary of Russell Mehta-owned Rosy Blue Group, Orra has undergone several management transitions since 2015-16.

The company parted ways with long-time chief executive and managing director Vijay Jain and sought young blood to adapt to newer trends in the industry. This is when Russell Mehta sold his shares to his cousin, Dubai-based Dipu Mehta. Russell still owns some preferred quasi-equity instruments but does not possess any voting rights. The rights will also be transferred as part of the new transaction.

“From 2013 onwards, the company lost its way. By 2015-16, external advisors were brought in to help the Mehtas rejig operations,” said a person in the know. “Former Reliance Fresh chief executive Gunender Kapur, currently chief executive and managing director of Vishal Mega Mart, was also roped in as an adviser. He initiated big changes that started yielding positive results.”

However, word in the industry has it, Dipu Mehta has been on the lookout for a partner who will add strategic value as well as capital.

In FY24, Orra increased revenue 23.5% to Rs 1,156 crore, up from Rs 936 crore a year before. It slid into losses of Rs 11 crore after three years of profits beginning FY21, according to data available on Tracxn.

Action in industry

The jewellery retail business has seen a major uptick in the past year, boosted by Tata group company Titan’s acquisition of 27.18% in its subsidiary CaratLane from the jewellery brand’s founder, Mithun Sacheti, and his family, for Rs 4,621 crore ($536 million) in August 2023.

Since then, a slew of privately held and venture capital-backed jewellery retailers have either raised fresh funds or are opting to go public.

Blackstone-backed diamond certifier International Gemological Institute listed in December and its market cap stood at Rs 22,573 crore as of last Friday.

On December 13, ET reported that Bengaluru-based Bluestone, had filed draft papers for an initial public offering, and is expected to price its issue at a valuation of Rs 12,000-13,000 crore, a more than 50% jump from its most recent private market fundraise.

For Advent, which manages more than $90 billion in assets, a business like Orra will align with its consumer focus worldwide. It has backed brands like Zimmerman’s Jewellery, Lululemon, Gerard Darel, Douglas Holdings and Cataratas do Iguaçu, among others.

Active in India since 2007, the buyout specialist has committed around $6 billion across 18 investments, including Yes Bank, Aditya Birla Capital, KreditBee, ASK Investment Managers, Cohance Lifesciences, Eureka Forbes, Bharat Serums and Vaccines, DFM Foods and Manjushree Technopack.

Courtesy: ET