Stent maker Sahajanand Medical Technologies Pvt. Ltd has raised fresh capital of Rs 230 crore ($36.23 million) in a funding round led by new investor Morgan Stanley Private Equity Asia for an unspecified minority stake.
The company said that mid-market private equity firm Samara Capital Management Ltd, which had invested around Rs 170 crore in Sahajanand in December 2016, also participated in this round.
VCCircle had reported last June that the Surat-headquartered Sahajanand Medical Technologies had hired professional services firm KPMG India Pvt. Ltd as an adviser for raising fresh funds.
The company said it will use the fresh injection to finance its organic growth, achieve synergistic acquisitions and build an aggressive research and development programme for further expansion of its portfolio.
“The proceeds from this investment round will bolster further expansion in overseas markets and assist in building our pipeline of next generation cardiovascular products,” said Bhargav Kotadia, managing director of Sahajanand Medical Technologies.
Founded in 1998, Sahajanand Medical Technologies develops and manufactures cardiac products in India. Its product portfolio includes coronary stents (drug-eluting and bare-metal), renal stents, angioplasty balloon catheters and other cardiac accessories in India and abroad.
The company has a manufacturing facility in Surat and an R&D centre in the Ireland's capital, Dublin.
Samara Capital director Abhishek Kabra said the funding round will further strengthen the balance sheet of the company.
Morgan Stanley's strategy
Arjun Saigal, who co-heads Morgan Stanley Private Equity Asia, said life sciences and healthcare is one of the PE firm's core focus sectors, with this investment marking its second best in the segment.
Its first deal in the space was a Rs 170 crore ($25 million) investment in Mumbai-headquartered pharmaceutical company ZCL Chemicals Ltd in December 2016.
Along with its latest investment, Morgan Stanley Private Equity Asia also invested Rs 152 crore ($23 million) in Southern Health Foods, which markets its products under the brand ‘Manna Foods’.
The firm established its PE business in India in 2008. It burnt its fingers with its first investment, as the founders of castor oil manufacturer Biotor Industries were booked for fraud.
In June 2014, the firm’s then managing director Aluri Srinivasa Rao had told VCCircle that the fund had made a soft commitment of around $250-$300 million for India.
Since then, Morgan Stanley PE has invested in Janalakshmi Financial Services along with other investors such as TPG. Its initial investments in Janalakshmi were in 2014 and 2013, with the most recent one taking place in 2016.
In June 2016, Morgan Stanley PE also invested in Five Star Business Finance.
Deals in the space
The medical devices segment in India is highly fragmented and imports form 75-80% of the total consumption of medical devices, equipment and consumables.
According to Espicom Business Intelligence, a healthcare-focussed research firm, India’s medical devices market is estimated to grow at a compound annual rate of 7.3% to $4.8 billion by 2019 from $3.4 billion in 2014.
Chennai-headquartered medical equipment maker Trivitron Healthcare Pvt. Ltd, which is backed by private equity firms True North and Eight Roads Ventures, is the most funded player in the segment.
The past couple of years have seen a string of deals in the sector. In March 2016, healthcare-focussed private equity fund India Life Sciences Fund II, which is advised by investment manager InvAscent India, pumped Rs 50 crore into medical devices maker Biorad Medisys Pvt. Ltd.
Four months later, TPG Growth, the mid-market and growth-equity investment platform of alternative investment giant TPG Capital, bought a majority stake in Noida-based surgical suture needles manufacturer Quality Needles Pvt. Ltd.
In 2017, online medical devices distributor Collateral Medical raised $3.5 million (around Rs 22.5 crore) in its Series A funding round from homegrown private equity firm Carpediem Advisors Pvt. Ltd.
The government had proposed some positive measures for the medical devices sector in the Union Budget for 2017-18 and suggested new rules to regulate the segment.
Mohit Khullar, director at investment bank Capital Global Advisory Pvt. Ltd, recently told VCCircle that the introduction of the Medical Devices Rules 2017 will be an important event to watch out for this year.
“We believe that these rules will help key domestic manufacturers by creating a common minimum standard in accordance with the global norms,” he said.