India: PE firm Everstone Capital in talks to invest $60m in pharmacy delivery startup Dial Health

A money lender counts Indian rupee currency notes at his shop in Ahmedabad Photo: Reuters

Private equity (PE) firm Everstone Capital is in discussions with Mumbai-based pharmacy delivery services firm Dial Health and is looking to invest Rs.400 crore ($59.94 million) in the company, according to two people aware of the development.

Dial Health provides drug delivery services to consumers, manages pharmacies in hospitals and also runs pharmacy stores in Mumbai.

“The firm, which started in 2012 as a consumer drug delivery services business, has backward integrated to manage distribution of drugs for pharma companies and is one of the fastest growing distributors in Mumbai, serving over 150 pharma firms and catering to more than 35,000 stock-keeping units,” said one of the persons cited above, requesting anonymity as he is not authorized to speak to the media.

The major factor attracting a PE fund like Everstone is the pharmacy distribution business, he added. “The pharmacy/drug distribution business is a huge and highly unorganized market. While the overall market size is between Rs.80,000 crore and Rs.1 lakh crore, the organized space is only around 5% of the market. The distribution space is highly fragmented with most major cities having almost 8-10 small distributors. There is a significant opportunity for organized distribution companies to grow.”

Everstone is looking to acquire a controlling stake in the company and is in advanced discussions with the firm, said the second person cited above, also requesting anonymity.

“Investors looking at the distribution space are looking to use these investments as platforms to acquire several of the smaller distributors to create scale. Most of the funds will go towards small acquisitions in the range of Rs.20-30 crore,” said the second person.

Everstone declined to comment on the story. Dial Health co-founder and director Hardik Dedhia also declined to comment on the fund-raising plans.

Everstone’s interest in Dial Health follows similar investments in the pharmacy distribution and retail space.

In August, Japanese conglomerate Mitsui and Co. bought a 20% stake in Hyderabad-based Keimed, India’s biggest drug and medical supplies wholesaler. Mitsui invested almost $25 million in the company run by the founding family of Apollo Hospitals group, the country’s largest hospital chain.

In October, healthcare-focused global private equity firm OrbiMed led a $50 million funding round in online pharmacy marketplace Netmeds.com.

Private equity funds have also shown interest in MedPlus Health Services Pvt. Ltd, the second-largest pharmacy retail chain in the country. PE investors General Atlantic and Bain Capital are in discussions to acquire the business, Mint reported on 16 October.

“It is a highly unorganized and fragmented market with regulatory limitations. Also upper-end margins are capped but even after all these constraints, people are betting on volumes, as the pharmacy delivery business market is huge and it makes up for the thin margins,” said Shiraz Bugwadia, managing director at financial services firm o3 Capital Global Advisory Pvt. Ltd.

Last year, Everstone Capital raised its third fund of $730 million. The PE and real estate investment firm had assets under management of $3.3 billion as of September 2015. The firm’s first investment from its new fund involved was the buying out of the bread and bakery business of Modern Foods from Hindustan Unilever Ltd in September.

The PE fund has invested in Ritu Kumar’s fashion house, health and wellness firm VLCC Healthcare Ltd, Internet services provider Tikona Digital Networks, beauty salon chain YLG India, restaurant operator Pan India Food Solutions Pvt. Ltd (Blue Foods), food products maker Capital Foods Ltd, wind-turbine maker Regen Powertech Pvt. Ltd, non-banking financial company IndoStar Capital Finance Pvt. Ltd and wine maker Sula Vineyards.

Also Read: India: Everstone LP Verlinvest hikes stake in Future Consumer for $17m

India: IFC, Everstone Capital invest $27m in publishing firm S Chand

India: PE firm Everstone acquires controlling stake in auto components maker SJS for $54m

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.