Rajesh Exports buys world’s largest gold refining firm Valcambi for $400 mn

In what could be the first overseas acquisition by an Indian jewellery firm, Rajesh Exports (REL), has acquired Switzerland-based gold and silver-processing company Valcambi for an investment of $400 million.

The Rs 50,000-crore REL made an all cash deal through its wholly-owned subsidiary in Singapore. Credit Suisse is part financing the acquisition through a long-term debt.

Grant Thornton assisted Rajesh Exports in due diligence.

With this acquisition, the Bengaluru-based REL will become an integrated player covering precious metal refining and gold jewellery making. Valcambi acquisition will be EPS accretive for REL.

“The coming together of REL and Valcambi would expand the global gold business and would prove very productive for the future global plans of REL group. We will seamlessly integrate Valcambi into REL group,” said Rajesh Mehta, chairman, Rajesh Exports.

Valcambi is the world’s largest precious metal refining company. It has processed and sold 945 tonne gold and 325 tonne silver on an average per year in the last three years, which is more than the annual consumption of gold in India. Valcambi refinery is accredited by London Bullion Market Association (IBMA) and Valcambi gold bars are accepted as gold delivery bars across all the official commodity exchanges in the world like COMEX, NYMEX, TOCOM, Shanghai Gold Commodities Exchange, Dubai Multi Commodities Exchange and MCX.

For the last 53 years, Valcambi has been a profit making and dividend-paying company. For the last three years on an average per year, Valcambi generated revenues in excess of $38 billion and Ebitda of $33 million by refining and selling 945 tonne of gold and 325 tonne of silver per year. Valcambi is also a zero-debt company with considerable cash surplus on its balance sheet.

Valcambi was owned by Newmont mining corporation and a group of Swiss investors. Newmont is one of the world’s biggest gold and copper mining company and is listed on the New York Stock Exchange since 1925 and is a part of S&P 500 Index.

“The coming together of REL and Valcambi would ensure that Valcambi improves its global share of gold business, by opening up new markets in India, West Asia and China,” said Valcambi CEO Michael Mesaric. Valcambi would focus on forward integration and innovative gold products in the European markets by utilising the technical expertise of Rajesh Exports, he added.

Rajesh Exports operates India’s largest gold processing unit at Bengaluru. It imports crude gold and refines at its facility and converts into jewellery for export markets. It also sells jewellery in the domestic market under the brand name “Shubh”. Its retail sales are largely concentrated in Karnataka.

For the year ended March 2015, Rajesh Exports had reported a net profit of Rs 654 crore on a revenue of Rs 50,462 crore, a growth of 82 per cent and 73 per cent, respectively over the previous year.

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