By RASUL BAILAY
\n MINT (Exclusive Partner The Wall Street Journal)
\n DELHI, 26 August 2008<\/i><\/p>\n
Since India bars overseas investments in a retail venture \n selling multi-branded products to consumers, the two foreign \n funds have invested in MedPlus’ wholesale arm<\/p>\n
Two venture capital firms have invested $25 million (Rs109 \n crore) in Hyderabad-based pharmaceutical retailer MedPlus \n Health Services Pvt. Ltd in the first publicly known foreign \n investment in a medical store chain.<\/p>\n
NEA-IndoUS Ventures, a Santa Clara, California-based venture \n fund, and an unnamed fund from West Asia have jointly invested \n the amount in MedPlus for an undisclosed stake, a person close \n to the transaction said, asking not to be identified ahead \n of a formal announcement.<\/p>\n
A top MedPlus executive, too, declined details. “It’s \n confidential,” said Madhukar Gangadi, chief executive \n of MedPlus. “At this point of time I am unable to tell \n you anything.”<\/p>\n
Since India bars overseas investments in a retail venture \n selling multi-branded products to consumers, the two foreign \n funds have invested in MedPlus’ wholesale arm. India \n allows up to 100% foreign investments in so-called wholesale \n cash-and-carry retail ventures that sell only to other retailers \n and businesses. Such ventures are not allowed to sell to end \n consumers. NEA IndoUS has, in the past, funded Microqual Techno \n Pvt. Ltd, a firm that makes telecom components and chips, \n and mortgage solutions provider ISGN Technologies Ltd.<\/p>\n
In a bid to gain access to India’s more than $300 \n billion retail market that is growing annually by 7%, the \n world’s top three retailers Wal-Mart Stores Inc., Carrefour \n SA and Tesco Plc. have announced wholesale ventures in the \n country and let local firms manage the front-end stores that \n sells to consumers. Such branded retail businesses account \n for just 3% of the market today, but are expanding at about \n 35% annually.<\/p>\n
Pharmaceutical products are retailed in India through 800,000 \n mom-and-pop stores and less than 1% is operated through organized \n ventures. In recent years, hundreds of branded pharma outlets \n have mushroomed nationwide operated by Apollo Pharmacy, Medicine \n Shoppe, Guardian Lifecare Pvt. Ltd, Subhiksha Trading Services \n Ltd and MedPlus among others. Guardian Lifecare is also looking \n for private equity (PE) investment, according to Ashutosh \n Garg, the company’s chairman and managing director.<\/p>\n
MedPlus operates more than 500 drug stores in Andhra Pradesh, \n Maharashtra, Karnataka, Tamil Nadu, Gujarat and Rajasthan \n and plans to double that number by March 2009. Last year, \n MedPlus received $5.2 million funding from Mauritius’ \n iLabs Management Llc. (currently called Peepul Capital Llc.), \n a PE fund co-founded by Satyam Computer Services Ltd’s \n former chief operating officer Srini Raju.<\/p>\n
Though the MedPlus funding is the first of its kind in drug \n retailing, foreign PE funds have backed retail ventures in \n other businesses in the past. <\/p>\n
In 2006, for instance, UK-based Actis Capital Llp. invested \n about $65 million for a controlling stake in the back-end \n operation of Nilgiris Dairy Farm that through a different \n company operates a chain of supermarkets.<\/p>\n
A retail expert predicted the MedPlus model may \n be copied in other retail niches. “That’s the \n kind of strategy everyone seems to be getting onto unless \n someone wants to retain control,” said Devengshu Dutta, \n chief executive of retail consultancy firm Third Eyesight. \n “That’s what has happened with Bharti-Wal-Mart, \n that’s what happened with Tesco and Tata.” Wal-Mart \n owns 50% in a cash-and-carry venture with Bharti Enterprises \n Ltd, the company that controls phone firm Bharti Airtel Ltd. \n Tesco, on the other hand, plans a wholly-owned unit in the \n back-end business that will supply to a Tata-owned supermarket \n chain, Star Bazaar.<\/strong><\/p>\n \n","protected":false},"excerpt":{"rendered":" By RASUL BAILAY MINT (Exclusive Partner The Wall Street Journal) DELHI, 26 August 2008 Since India bars overseas investments in a retail venture selling multi-branded products to consumers, the two foreign funds have invested in MedPlus’ wholesale arm Two venture capital firms have invested $25 million (Rs109 crore) in Hyderabad-based pharmaceutical retailer MedPlus Health Services […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2622","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n