Balu Nayar-led Morpheus Capital Advisors, which has partnered with investment bank o3 Capital, has made the first close of its debut fund at Rs 425 crore, according to a statement. The PE firm is focussed on investments in mid-sized Indian consumer businesses, aimed at the development of consumer brands. Nayar is the former head of sport marketing group IMG in India.

Morpheus is targeting Rs 900 crore for its final close. Morpheus plans to take equity stake in companies in lieu of advertising space, which Morpheus will buy from publishers, and cash. Morpheus plans to invest in sectors like FMCG, home and personal care, consumer services such as education and healthcare, and specialised retail.

According to an earlier interview, Morpheus will pick up anywhere from 2-20% stake in companies who are looking to grow and have products and services that need branding and advertising support. The fund works somewhat like Bennett, Coleman & Company’s Times Private Treaties Division, which has been making investments in companies in exchange for advertising space in its various media products like The Economic Times, The Times of India and Navbharat Times.

“India is an under-branded market, and we believe that there is exciting potential in the creation and growth of Indian consumer brands across various product categories. Unlike many other markets where multinational brands dominate, there is a definite space for emerging Indian consumer brands, especially in the Tier II and III markets,” said Balu Nayar, Managing Director of Morpheus Capital Advisors.

According to the December 2010 edition of Advertising Expenditure Forecasts published by ZenithOptimedia, India's advertising market, which grew slightly in 2009 to $4,463 million, is expected to grow 13%  in 2010 and 13–15% in 2011–2013, year on year. The total projected market size of $7,548 million in 2013, an increase of 69% when compared to the 2009 figure.

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