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Morgan Stanley starts India PE deals

Morgan Stanley's private equity unit has invested $37.5 million (25.2 million pounds) in an unlisted firm in its first transaction in India, and a top official said the firm expected a busy 2009 as the need for capital drives deals.

Morgan Stanley Private Equity Asia took a “significant minority” stake in Indian castor oil maker Biotor and was focusing on healthcare, education, financial services and consumer products, said Srinavasa Rao Aluri, managing director of its India PE unit.

“We have the dry powder, a good team in place and a healthy pipeline, which makes the coming year look interesting,” he told Reuters. “I do hope the activity will be feverish for us next year.”

Two-thirds of a dedicated $1.5 billion Asia fund raised last year was still available, and the firm hopes to deploy a good part of it in India over the next two years, he said without elaborating.

“This is a good time for PEs to make an investment in the country,” said Aluri, who joined Morgan Stanley in May after six years at ICICI Ventures, the private equity arm of No.2 lender ICICI Bank.

“You still need to push for a change in the organisation but at least you don't have the valuation pressures.”

The benchmark share index has tumbled 53 percent so far this year as the global credit crisis cripples market values.

The sharp fall has also depressed share sales, pushing capital-thirsty companies to look to private equity firms with money to spend. 

Private equity and venture capital investments in India rose to $9.7 billion in the first nine months of this year from $9.5 billion a year earlier, according to Venture Intelligence, an Indian deal-tracking firm.

Morgan Stanley would help Biotor, a profitable firm with revenue of about 10 billion rupees, develop and market substitutes for petrochemicals that are used in autos, paints and lubricants, Aluri said.

“Even in this slowdown, we still see growth coming. Its products are drivers of green substitutes for petrochemicals and are used across sectors.”

Source: Reuters

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