General At­lantic Seeks Lo­cal Ally for MedPlus Buy

Move aimed at work­ing around reg­u­la­tory hur­dles re­lated to FDI in multi-brand re­tail

The Economic Times - - Companies - Sneha.Shah @times­


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.

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