SYDNEY/MUMBAI, April 2 (Reuters) - Blackstone is

exploring raising $300 million via an India IPO of the

International Gemological Institute (IGI), less than a year

after it acquired the company, amid booming stock markets in the

region, three people familiar with the matter said.

Blackstone acquired IGI for $570 million in May 2023 from

Chinese conglomerate Fosun and the business's founding Lorie

family. IGI has most of its business in India and describes

itself as the world's largest independent lab for testing and

grading diamonds and other gemstones and jewelry.

Blackstone has appointed investment banks Morgan Stanley ( MS )

and India's Kotak to lead the IPO deal, two

sources added.

Blackstone had initially been seeking a valuation of about

$1.5 billion in the IPO, although in new talks it is looking for

as much as $3.5 billion, two sources said. However, the price

will be decided in coming months and will depend on investor

demand.

Blackstone and Morgan Stanley ( MS ) declined to comment while IGI

and Kotak did not answer queries seeking comment.

While founded in Belgium 50 years ago, the majority of IGI's

revenue and profits come from India today, where it has most of

its labs and provides diamond screening, sorting and academic

courses.

With the IPO, IGI hopes to capitalise on the growth of

lab-grown diamonds in India, the second source said. These labs

make jewels that look identical to natural diamonds but are less

expensive. India's federal budget last year cut taxes on

manufacture of lab diamonds in a bid to boost the sector.

Plans to list IGI are in the early stages and could change,

the sources said.

India's jewelry market was valued at $78 billion in 2021

and is a lucrative one for players like IGI. While most of the

jewels made are exported, gold - historically dominant in the

country - is slowly giving way to diamonds among some younger

consumers.

Generally private equity firms usually look to list

companies 5 years or so after investment, and Blackstone is keen

to take advantage of India's hot IPO market which is the busiest

in Asia so far this year, two of the sources added.

India has emerged as the second busiest market in the world

for equity capital market (ECM) deals after the United States.

Indian companies raised $2.3 billion in the first quarter of

2024 in IPOs, according to LSEG data, up more than 12 times the

$166.5 million raised in the same period last year, LSEG data

showed.