Dubai: The jewellery retailer Joyalukkas has secured a Dh500 million lending from three banks in the UAE, which will be used to add to its Gulf store network and also a possible move into the US. A key market for further expansion will be Saudi Arabia, where it expects to double the store locations from the current five.

Part of the new financing will also be used to retire or refinance older debt exposures of the operating company overseeing the Group’s Gulf and other overseas interests. The Group has a separate Indian subsidiary, which is also into money exchange, real estate and retail apart from jewellery sales.

The three banks involved in the “club” deal are Standard Chartered (which took on the role of the originating, structuring and coordinating entity), Emirates NBD (through its Emirates Capital division) and Mashreq Bank. Standard Chartered has had a banking relationship with the Group for more than 15 years.

“There are a few “barricades” put in by the banks on the kind of clarity they wanted to before signing up, which is reflective of the changed market circumstances,” said Joy Alukkas, Chairman and Managing Director. “Just four months ago, there would have been no such additional requirements. The terms of what we have agreed to, however, have not changed.

India operations

“But they have seen our track-record — and the Gulf operations recorded revenues of Dh2.5 billion in the last financial year — and we were able to come at a favourable financing rate. The current low rate environment need not remain so and we took our chances to lock our funds before that happened.” (The India operations contribute another Rs70 billion in the last financial year.) The repayments will be made monthly after a six-month period. There is also the option to top up the loan a year or two down the line, Alukkas added. Part of the existing loan exposure includes $80 million (Dh294 million) at a five-year tenor.

Local banks have come together to raise what is still a substantial sum for a jewellery retailer. More so, as the founder of one such retailer, Atlas, owes banks well in excess of Dh100 million. (Its founder has just been handed a jail term following defaults on part of what he owes.) “The trading conditions have undergone a change since the Atlas situation,” said Alukkas. “It explains why lending institutions have become over cautious in recent months.”

Locations

The retailer has more than 40 locations in the UAE, but could be adding new ones “at locations in Dubai where we are yet to be and more in Abu Dhabi,” said Alukkas.

“Saudi Arabia and Qatar too should see a doubling from where are now.

“At some point it’s our plan to make some headway into the US … we could open in New Jersey and four or five other states.”

As of now, it has interests in Singapore, Malaysia and the UK outside of India and the Gulf.

“Despite the market challenges, this financing has been arranged to support them with its expansion strategy,” said John Iossifidis, Mashreq’s Executive Vice-President and Group Head of Corporate and Investment Banking.