Tribhovandas Bhimji Zaveri is now GRT's jewel

**Saad** (0:01)
Hello folks, I'm Saad, and you're tuned in to Finshots Daily. If you're new here, welcome. If you're returning, welcome back. In today's episode, we break down GRT Jewellers' acquisition of Tribhovandas Bhimji Zaveri.
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This week, we've seen yet another important merger and acquisition deal after Happiest Minds and ITC Infotech. This one's in the jewellery space.
Tribhovandas Bhimji Zaveri or TBZ, the original, as you might popularly know it, is being taken over by GRT Jewellers, a Chennai-based jewellery brand known across South India. But as soon as news of the acquisition broke out, the markets were already asking two questions.
One, why sell a family business that has made its mark for over 160 years? And two, why sell it at nearly a 30% discount? Well, let's answer the second question first. And it's actually no rocket science. This is a private sale of a large 74% controlling stake valued at over 1000 crore rupees in a thinly traded company. TBZ has very little institutional ownership, and relatively few shares change hands every day. So while the stock may be trading at a certain price, that price is based on relatively small quantities of shares being bought and sold. But it doesn't necessarily mean that there are enough buyers willing to buy shares worth thousands of crores at the same price. And if promoters try to sell their entire stake in the open market, the sheer supply of shares hitting the market could push the stock price down sharply. That's why they're selling the stake privately to a strategic buyer like GRT. So you could think of it this way. GRT is taking a huge block of shares off of their hands in one go. So it can negotiate and say, I'll buy the whole thing, but I'll pay a little less than the current market price. For the promoters, that trade-off makes sense. They avoid flooding the market with shares and potentially having to sell a large part of their stake at much lower prices, which explains the discount. Now, to answer the first question, let's first give you a bit of background. TBZ was started by Bhimji Zaveri. As a single store out of Mumbai's Zaveri Bazaar in 1864, later his son, Tribhovandas Bhimji Zaveri, expanded that one store into several new showrooms. And over the years, nearly five generations of the family have taken the business from few showrooms to 37 stores across 28 cities, most of them clustered in Maharashtra and Gujarat. The company makes roughly 65% of its revenue from wedding and occasion related jewellery purchases. It also claims several firsts in the Indian jewellery industry, from promoting lightweight precious jewellery and offering lifetime buyback on gold and diamond jewellery, to providing certified solitaire diamonds and introducing a 100% BIS hallmarked 22 carat gold jewellery. And now, after more than 160 years in the business, the family is striking a deal with GRT Jewellers. GRT has proposed to buy 74% of TBZ from the existing promoters in an all cash deal worth 1033 crore rupees. And because that gives GRT a controlling stake, SEBI's takeover regulations kick in.
That means GRT must also make an open offer to the public shareholders, giving them an opportunity to sell their shares too. That means GRT must also make an open offer to the public shareholders, giving them an opportunity to sell their shares too. Now, if you have noticed, we mentioned that TBZ has a stronghold in Western India, while GRT has one in South India. And that right away gives us a clue as to why this acquisition is happening. Because you see, despite being in the business for decades, scale seems to have been a real challenge for TBZ.
Sure, the brand may have been recognised across India, but the actual expansion didn't quite live up to its ambitions. For context, when TBZ went public in 2012, it explicitly raised IPO money to fund an aggressive expansion plan. It wanted to have 57 showrooms within 3 years, roughly tripling its size at the time. Except that didn't quite happen. 14 years later, TBZ has just 37 stores. In other words, an IPO that was supposed to be a launch pad for national scale instead resulted in relatively modest expansion over the next decade and a half. And there are a couple reasons for that.