Grading Lab IGI Aims to Go Public on Dec. 20

By Rob Bates | December 09, 2024

International Gemological Institute (IGI), the world’s second-largest diamond grading lab, is going public and aims to begin trading on Indian stock exchanges on Dec. 20.

A 613-page red herring prospectus, dated Dec. 6, says the initial public offering will open for its first bids from Dec. 13 through 17. IGI hopes to raise 42.25 billion rupees (approximately $497 million), slightly less than the $569.65 million that Blackstone Group subsidiary BCP Asia II TopCo paid for the lab in 2023.

Following the IPO, Blackstone will still own 76% of IGI, managing director and CEO Tehmasp Printer told CNBC. (Blackstone currently owns 100% of IGI.) “I believe Blackstone is committed [to owning the lab] for the next 10 years, which could also be extended by a couple of more years,” he said.

The offering values IGI overall at around $2.1 billion, Printer said.

A portion of the IPO’s proceeds will go to purchasing IGI’s Belgium and Netherlands affiliates, while much of the rest will fund “general corporate purposes,” the prospectus says. IGI operates 31 grading labs and 18 schools.

According to the prospectus, lab-growns account for about 59% of IGI’s revenue, while only 19% comes from natural diamonds.

“[Lab-grown] is the new kid on the block, and we are sitting on top of it,” Printer told CNBC. “Natural diamond[s are] unique.… Lab-grown is a man-made diamond, so its production is more standardized. So we have economies of scale where [grading] lab-grown is concerned.”

The prospectus notes that a lot of IGI’s lab-grown grading is done in diamond growers’ factories, by IGI “gemologists and employees of our customers, who attend trainings provided by us on certain basic steps of the certification process.”

Industry commentator Avi Krawitz has said that such setups “may ring some alarm bells,” noting that IGI admitted it may “have less oversight” in these situations in its draft prospectus this summer.

According to the Dec. 6 prospectus, while IGI conducts “quality checks and periodic calibration of our gemologists to reassess and adjust their grading techniques, such measures may not be effective in preventing all instances of grading errors or fraud by gemologists or third parties.”

Post-acquisition, IGI would have 13 in-factory labs—12 in India and one in the United States.

The prospectus also says that IGI received a letter on Sept. 2 from India’s Ministry of Corporate Affairs alleging noncompliance in certain accounting matters prior to Blackstone’s acquisition. The company says it has rectified some of the issues and believes it was compliant on the others. Even so, the prospectus warns that IGI “may be subject to penalties or other regulatory actions in this regard.”