General Atlantic Seeks Local Ally for MedPlus Buy
Move aimed at working around regulatory hurdles related to FDI in multi-brand retail
Mumbai: Global private equity fund General Atlantic (GA) is looking for a domestic partner to buy out Hyderabad-based MedPlus, India’s second-largest retail pharmacy chain. The idea is to mitigate the regulatory hurdles associated with FDI in multi-brand retail, said three people directly involved in the search. “GA is very keen on buying a controlling stake in the company and is driving the search for a minority Indian partner,” an investment banker with knowledge of the fund’s plans said.
Last year, Warburg Pincus dropped out of the race to acquire the company that is being valued at $350-400 million. In January this year, Capital International, too, looked at the company and evinced interest, said people familiar with the matter. Investment bank Credit Suisse has been appointed by investors to look for strategic buyers and buyout funds.
General Atlantic India head Sandeep Naik offered no comments in an emailed response to ET queries, while the spokesperson for MedPlus did not respond to an emailed query sent last week.
MedPlus is majority-owned by a clutch of PE investors. In 2011, private equity investors Mount Kellett Ca- pital Management, TVS Capital and India Venture Advisors bought a 69% stake in it for .₹ 410 crore ($90 million) from Bahrain-based Arcapita Bank. The rest is held by promoter Madhukar Gangadi and his family.
With revenues of about .₹ 1,200-1,300 crore, investors and promoters are expecting a significant premium of two times of sales, valuing the company at about .₹ 2,200-2,500 crore.
“Since there are restrictions on FDI in multi-brand retail, GA wants an Indian partner which can come along on its terms,” said another person with direct knowledge of the deal. Even though this business holds a lot of potential, it is fraught with regulatory uncertainties.