Harry Winston Entering the Diamond Fund Arena

(IDEX Online News) - Harry Winston Diamond Corporation is teaming with a diamond investment fund to raise money for purchasing diamonds, and at the same time will provide the fund with selling prices needed for determining the market value of the fund. The initial subscription is $100 million, with another $150 million to be raised a year later.

Under the terms of Harry Winston's arrangements with the fund, Diamond Asset Advisors AG (DAA), the company will source diamonds that have the same quality characteristics that Harry Winston uses in its jewelry and timepieces, with a portion coming from its inventory. The fund will purchase these diamonds and then consign them to Harry Winston. The price paid to replace the diamonds sold by Harry Winston will be used by the fund as a basis for determining the market value of the fund.

DAA is forming the polished diamond investment fund as a limited partnership, of up to $250 million, offering institutional investors direct exposure to the wholesale market price of polished diamonds.

The polished diamonds sourced through this relationship will increase Harry Winston's inventory without burdening its working capital. It will also reduce the risk associated with diamond price volatility in the luxury brand business, the diamond firm said.

Bob Gannicott, Harry Winston Diamond Corporation's Chairman and CEO said the relationship with DAA represents an innovative and efficient way for the company to support its luxury brand growth objectives. The fund, in turn, will benefit from Harry Winston's diamond management and governance structures.

The first subscription, of approximately $100 million, is expected to be raised later this year, with the remaining $150 million expected to be raised over the following year, subject to market conditions. Upon initial funding by DAA, Harry Winston expects to sell a substantial portion of its existing polished diamond inventory to the fund at market prices.

The fund will be managed by DAA, and there is no ownership interest between Harry Winston Diamond Corporation, or its affiliates, and DAA. Ray Simpson, currently the Executive Vice-President of Harry Winston Diamond, will join DAA as a member of its management upon leaving Harry Winston.

Harry Winston's arrangements with the fund are subject to the fund raising a minimum of $100 million.