Motilal Oswal Alternate Investment Advisors on Tuesday said it has bought a minority stake in Rajkot-based Pan Healthcare for Rs 400 crore (around $50 million).
The investment in Pan Healthcare follows Motilal Oswal’s thesis of investing in trends of underpenetrated categories, large distribution plays and Indian manufacturing.
“The funds raised will be used for investing in the brand, ramping up the distribution infrastructure, and building a robust organization to help us drive the next phase of growth,” said Chirag Pan, promoter of Pan Health.
Pan Health sells baby diapers under Little Angel brand, adult incontinence products under Liberty brand, and sanitary napkins and feminine hygiene products under Everteen brand. It also sells personal care products under brands named Neud, Mansure and Naturesure.
Notably, the investment from Motilal is one of the largest in the current funds. Motilal Oswal also stated that Pan Health business fits its thesis of large distribution plays and Pan Health business fit squarely on the fund’s thesis.
“The Indian hygiene products segment is significantly underpenetrated, as reflected by per capita diaper consumption of 60 units vs. 1,000 in the US and 400 in China. The market has also been dominated historically by MNC brands with no large Indian brand so far,” said Vijay Dhanuka, director, head of consumer sector at MO Alts.
Dhanuka added that the firm is reasonably confident that with its focus on manufacturing, and has delivered on its vision of creating a best-in-class manufacturing plant that surpasses even international setups.
“The company’s strategy of creating large scale operations, be it in manufacturing or offline distribution, through its large feet-on-the-street workforce, will allow them to offer high-quality products at competitive prices not just across tier II and III cities but even rural areas,” he said.
Founded in 2016, Pan Health claims to have a pan-India distribution presence through a network of offline channels that consist of over 350,000 retail touch points and online channels like third-party e-commerce players. Both channels are serviced through a manufacturing facility in Rajkot.
Pan Health is promoted by the Pan Group, a business house with interests across segments like cement, cotton, steel, and agri-trading, among others.
Orbit Financial Capital acted as the exclusive financial advisor to Pan Health on the transaction.
MO Alternate Investment Advisors, founded by Vishal Tulsyan, is a subsidiary of Motilal Oswal Financial Services Limited (MOFSL), a diversified financial services group. MO Alts manages both private equity and real estate funds with around $1.7 billion in assets under management between the two asset classes.
The private equity vertical in last in the last 16 years has made over 40 investments and has exited 15 investments, delivering a gross MOIC (multiple on invested capital) of 5.3x and gross IRR (internal rate of return) of 26.7%.
Including the four growth capital funds, Motilal Oswal PE also manages five real estate funds.
The third fund's investments include MAS Financial Services, a Gujarat-based listed non-bank lender; Mysuru-based N Ranga Rao & Sons, India's largest maker of incense sticks, Ludhiana-based Happy Forging Ltd and Molbio Diagnostics Pvt Ltd which turned unicorn after raising additional capital from Singapore-based Temasek. One of Its investments was also in a healthy snacks company, Happilo - also backed by A91 Partners - was from its third fund.