Quadria carries the Milestone-Religare torch

While Varma was making preparations for the next phase in his career, Milestone Religare - a 50-50 joint venture between Milestone Capital Advisors and Religare - faced an uncertain future. In 2011, Milestone's founder, Ved Prakash Arya, died in a freak accident and his family decided to exit the JV, which is responsible for the INR4.5 billion ($82.8 million) India Build-Out Fund. But who would buy it and would the fund's LPs be happy?

"There was a lot of interest in the Araya stake and I wasn't the only option but things developed over the last couple of weeks," Varma tells AVCJ. "There was a lot of pressure from LPs and others to do this."

While not the only option, Varma was arguably the most logical. As a representative of Religare, he had been involved in the JV from the outset and serves on the boards of several portfolio companies. He also offered stability. Both the Arya family and Religare agreed to sell their stakes in Milestone Religare, making the GP a wholly-owned subsidiary of Quadria's onshore India unit. Religare remains an LP in the fund, alongside investors ranging from blue chip domestic banks to high net worth individuals.

Milestone Religare's four investment professionals in Mumbai are being retained and will take responsibility for managing the fund's six portfolio companies - three in healthcare, two in education and CARE Ratings, India's second-largest credit ratings agency. There have been two partial exits and the portfolio will be wound down over the next 24-36 months.

"We are currently about 1.8-2x on the portfolio but this is clearly no reflection of what will eventually happen on exit," Varma says. "We have made follow on investments in these portfolio companies that have been much richer."

There is little crossover between Milestone Religare and Quadria - the latter is run by a separate team of six investment professionals - beyond an interest in healthcare. Quadria, which is eying a first close of $100 million in the second quarter, focuses on healthcare delivery, life sciences, medical technology and retail healthcare. More than two thirds of its corpus will be concentrated on the first two areas and only 30% of the capital will be deployed in India.

"There is going to be an avalanche of opportunity in healthcare in South and Southeast Asia in the next 10 years," Varma explains. "The key statistic is that 80% of healthcare expenditure is out of the private pocket and only 20% is public expenditure. There is a fundamental need for high-quality healthcare as incomes increase across the region but a lack of infrastructure and manpower to deliver it."

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• Topics
• GPs
• LPs
• Financials
• South Asia
• Religare Capital
• Milestone Capital Partners
• Quadria Capital
• India