Q&A: Jayen Shah, Founder of Mavuca Capital Advisors
National Jeweler chats with the career banker about the prospects for the lab-grown diamond industry and financing options.
Jayen Shah: Millennials and Gen Zers constitute probably the biggest growing demographically similar consumer segment.
On the other hand, lab-grown diamond technology has been around for more than 60 years. However, it is only recently that advancements in technology have made high quality, affordable lab-grown diamonds a reality.
- Time taken for technology stabilization, product adoption and quality framework;
- Volatility in product pricing;
- Limited or non-availability of “seconds” market;
- Fragmentation of market players;
- Higher financial risk-reward; and
- Perception of enhanced credit risk.
- Financing format: term loan
- Tenure: up to seven years
- Amount of loan: up to 70 percent of the project cost. However, many lenders require cost of land purchase to be funded from promoters’ equity.
- Loan repayment with principal repayment moratorium for 12-18 months and, thereafter, principal repayments customized to projected cash flow generation.
- Financial covenants linked to operating parameters, such as debt/EBIDTA and/or debt service coverage ratio (DSCR)
- Security: first charge of land, plant and machinery
- Ratings: lenders prefer to have investment grade rating from SEBI-registered rating agencies.
This story is one of three included in the special India Diamond Report newsletter. The stories are produced by an independent editor based in India.
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