Rajesh Exports buys Swiss gold refiner for $400m

BENGALURU: Jewellery firm Rajesh Exports has bought the world's largest gold refiner, Valcambi, in an all-cash deal of $400 million (Rs 2,560 crore), a move that is expected to help the Bengaluru-based company ensure a steady supply of raw material at a competitive price.
The company, one of the world's largest manufacturers of gold jewellery, said on Monday that it had, through its wholly owned subsidiary REL Singapore, bought Valcambi's holding company European Gold Refineries.
European Gold Refineries is owned by US-based Newmont Mining, the world's No. 2 gold producer, and a group of Swiss investors. Newmont owns 60.6%.
Rajesh Exports chairman Rajesh Mehta told TOI that the deal came at a very reasonable cost, and would raise the level of profitability of the company. It also provides "access to the best mines in the world", he said.
Switzerland-based Valcambi, formed in 1961, has an annual capacity of 1,600 tonnes of gold and 2,000 tonnes of precious metals per annum. It had revenue of more than $38 billion and EBITDA of $33 million on an average for the last three years.
Rajesh Exports' net profit nearly doubled to Rs 654 crore for the full year ended March 31, 2015, from Rs 360 crore the year before. Net sales rose 73% to Rs 50,462 crore.
Valcambi is accredited with the London Bullion Market Association and its gold bars are accepted as good delivery bars across exchanges such as Comex (Chicago Commodities Exchange), Nymex (New York Commodities Exchange) and MCX (Multi Commodities Exchange, India).
India is the world's biggest consumer of gold, with annual demand around 900 tonnes per year.
He said the company would raise the capacity of its Indian refinery in Rudrapur, Uttaranchal, to 200 tonnes per year from 80 tonnes with the help of Valcambi's technology, Mehta told TOI.
Valcambi CEO Michael Mesaric, along with his entire senior management, will join Rajesh Exports. Mesaric, who has been the CEO since 2002, said that the deal would help Valcambi reach out to new markets in India, China and the Middle East. "Valcambi will also focus on forward integration and on innovative gold products in the European markets, by utilizing the technical expertise of Rajesh Exports," he added.
Credit Suisse, which fully owned Valcambi from 1980 to 2003, is part financing the acquisition through a long term debt.
Shares of Rajesh Exports rose 3.2% to touch a year high of Rs 549.70, before closing at Rs 540.85 on Monday on the National Stock Exchange.