Morgan Stanley Private Equity (MSPE), which invests in India from its $1.5-billion Asia fund corpus, is open to both buyout and growth transactions in the country.
MSPE joins buyout biggies like KKR who are looking at growth deals much in line with the general trend of private equity play in India being mostly skewed to smaller deals.
Morgan Stanley PE Asia’s solo deal in India so far has been Rs 182-crore equity investment in castor oil-maker Biotor Industries. Riding on the back of a strong deal pipeline, MSPE may be looking at closing three to four investments by the end of the year, a senior official told VCCircle.
“India is one of the core focus areas. We will make allocations to India from our global fund. We will do both growth equity and buyouts in India. You can add a lot more value with a portfolio company in a buyout,” said Aluri Srinivasa Rao, India head for Morgan Stanley PE Asia.
Rao is equally bullish of buyout opportunities as he feels companies are more willing to dilute majority stake now than ever before. A lot of second generation entrepreneurs are getting more comfortable with diluting majority stakes, he said.
An ex-ICICI Ventures hand, he is keen to replicate in India some of Morgan Stanley PE’s successful models in Asia. In one of its recent deals, MSPE Asia along with a few management shareholders concluded the management buyout of Chinese drug maker, Sihuan.
The fund is upbeat about opportunities in healthcare, education and infrastructure enabling companies. “Education is a huge market,” Rao said, adding, they will look at the entire value chain in education.
Rao, the key man behind ICICI Ventures’ roll-up model for healthcare I-Ven Medicare, may not necessarily replicate it in his current venture. A “roll-up” transaction is one in which smaller companies in a traditionally fragmented industry are consolidated to achieve scale play and benefits.
“We may look at improving on that model,” he told VCCircle.