Mumbai: The promoter of MedPlus Health Services Pvt. Ltd, the second largest pharmacy retail chain in India, has raised around Rs700-750 crore (approximately $115 million) in debt financing from Goldman Sachs to buy out existing private equity investors, said two people aware of the development.

MedPlus was founded by Madhukar Gangadi. The private equity investors were US-based Mount Kellett Capital Management Lp, TVS Capital Funds Ltd and Ajay Piramal’s India Venture Advisors Pvt. Ltd. The three investors together held a 69% stake in MedPlus.

Mount Kellett held 49% in MedPlus through its arm MKCP Direct Investments (Mauritius) IV Ltd, TVS Capital’s TVS Shriram Growth Fund I owned 10.59% and Piramal-led India Venture Trust Fund-I held 9.09%, according to regulatory filings.

“MedPlus promoter has recently raised around Rs750 crore from Goldman Sachs through debt financing in order to buy out the three PE funds, which had been looking for an exit for quite some time. Madhukar Gangadi now owns around 90% stake in the company," one of the two people cited above said requesting anonymity as he was not authorized to speak to reporters.

In August, Mint reported that private equity funds General Atlantic and True North were in talks to jointly invest around $200 million in
MedPlus by buying out the stakes of the three existing investors.

“The company plans to go public in the next 12-18 months," added the first of the people cited earlier.

Goldman Sachs declined to comment on the development. Emails sent to Gangadi did not elicit any response.

“We confirm exit of our investment in MedPlus health services. All the PE investors including ourselves have exited through buyout by the promoter. We can only confirm that the promoter has organized debt finance for the buyout, but details of the same are not available with us," TVS Capital said in an email.

Gangadi, a physician with an MBA from the University of Pennsylvania’s Wharton School, set up his first medical store in Hyderabad in 2006. Today, MedPlus has over 1,400 stores spread across 12 states in India, employing around 10,000 people and serving over 250,000 customers a day.

MedPlus also runs businesses such as diagnostics chain MedPlus Pathlabs, RiteCure, a distributor of medical and surgical supplies to hospitals, MedPlusMart.com, an online medical store, and MedPlusLens, an optical store. Most of them are co-located with the pharmaceuticals stores.

Among private drug retailers, Apollo Pharmacy, run by Apollo Hospitals Enterprise Ltd, is the largest, with more than 2,000 stores across the country.

MedPlus has aggressive plans to expand its network. In March 2015, Mint reported that the firm plans to expand its pharmacy chain to 10,000 stores. “MedPlus has so far invested around Rs170-180 crore and will need another Rs2,000-2,200 crore to reach 10,000 stores," Gangadi had said.

According to a 2016 report by healthcare- and pharma-focused management consulting firm Pharmaion, the pharmacy market in India is projected to expand at a compound annual growth rate of more than 8% between 2016 and 2021.

“Rising sales of prescription, generic as well as over-the-counter drugs, increasing life expectancy, growing incidence of chronic diseases, ageing population base, increasing disposable income, rising health consciousness, and growing adoption of wellness and personal care products by a young population are the major factors propelling the country’s pharmacy market," the report said.

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