MSPEA-backed Biotor close to shuttering - report
Morgan Stanley Private Equity Asia’s (MSPEA) first and only Indian portfolio company from its pan-Asian fund, Mumbai-based biofuel company Biotor Industries, is reportedly on the verge of closing its operations, which could leave MSPEA out of its INR2 billion ($39.4 million) investment.
Sources close to the company told the Business Standard that Biotor is saddled with approximately INR11 billion in debt, which remains despite a previous debt restructure. In recent years, that company further failed to achieve milestones set in conjunction with its share purchase agreement, the newspaper noted.
MSPEA invested INR1.8 billion for a 30% stake in Biotor in 2008, and later increased its stake to 45% for an extra INR180 million. The invested capital came from MSPEA's $1.5 billion regional fund.
"This investment in Biotor represents Morgan Stanley Private Equity Asia's strategy to invest in companies with exceptional management teams and unique competitive advantages. We are also pleased to be making our first investment in India," Chin Chou, managing director and head of MSPEA, said in a statement regarding its December 2008 investment.
The fund is reportedly allowed to take an additional 20% stake in the company, but the company's operational difficulties appear to be too great to make further investment worthwhile. Biotor makes raw-material castor oil products used in lubricants, greases, personal care products, pharmaceuticals and fragrances, which are produced from its manufacturing and seed crushing plant in Gujarat.
Indian reports note that Morgan Stanley Private Equity has four other investments in India, transacted through its global fund.
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