Private equity firm Blackstone has acquired a majority stake in the International Gemological Institute (IGI) in a deal worth $535m, valuing the certification firm at more than half a billion dollars. IGI is a global laboratory and school operator for gemology and diamonds, and is the largest certification firm for lab-grown diamonds and the second-largest for natural diamonds. The firm has been certifying lab-grown diamonds since their emergence in 2005, and the sector is expected to grow at an annual rate of 15% from 2019 to 2022, with a current global retail market value of $7bn.
Blackstone, which acquired the stake from Chinese investment firm Fosun and the Lorie family, will work to expand IGI’s global presence, with a focus on the Indian and Chinese markets. India is one of IGI’s biggest markets, and it operates 14 schools that train diamond industry professionals and manages 20 laboratories that certify a range of precious stones. Around 90% of the world’s rough diamonds are polished in India, while China has become an important retail market.
According to Roland Lorie, CEO of IGI, Blackstone’s operational expertise and technological capabilities would help the firm expand its reach and grow exponentially. Senior MD of Blackstone’s Private Equity Group Mukesh Mehta added that Blackstone would bring a track record of creating successful companies to IGI.
The acquisition of IGI is a strategic move for Blackstone, marking the private equity firm’s entry into the fast-growing sector of certification for lab-grown diamonds. It is worth noting that IGI owed its lenders $150m, although Blackstone did not reveal the exact sum it paid for the business.
The acquisition of IGI is significant for the diamond and jewellery industry, which relies heavily on certification services such as those offered by IGI. The sector is worth around $80bn in terms of global natural diamond jewellery retail sales. While lab-grown diamonds make up a much smaller segment of the market, their increasing popularity and growth in sales figures make certification services for lab-grown diamonds a growing area of importance for the industry.
In conclusion, Blackstone’s acquisition of a majority stake in IGI is a strategic move for the private equity firm, as it enters the rapidly growing market for certification services for lab-grown diamonds. The move also highlights the importance of certification services for the diamond and jewellery industry, with IGI being the largest certification firm for lab-made diamonds and the second-largest for natural diamonds.
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