Morgan Stanley may cut stake in Strides Arcolab

Anju Ghangurde & Priya Srinivasan


Mumbai, Oct 14: Morgan Stanley is believed to be evaluating the option of diluting its holding in the Bangalore-based pharmaceutical company, Strides Arcolab. Morgan Stanley is believed to control around 8 per cent of Strides Arcolab’s equity capital.

When contacted, an official spokesperson for the company said that as a policy the firm does not comment on its investment decisions.
Industry sources, however, say that Morgan Stanley and venture capitalist firm Schroders Capital Partners have been looking at a possible exit option as they realign their portfolio.

Strides Arcolab chairman and managing director Arun Kumar, in an e-mailed response to The Financial Express said, “As we understand, Schroders does not at this moment of time have any plans for divestment of its stake in the company.”

“As regards the Morgan Stanley stake, we do not have any first right of refusal on its shareholding in the company and they are free to sell to anyone.” The Strides Arcolab scrip has been trading in the range of Rs 51 and Rs 54 on The Stock Exchange, Mumbai (BSE), over the recent past.

Media reports had earlier suggested that Schroder Capital Partners has been evaluating the option of divesting its 36.9 per cent holding in Strides Arcolab, adding that investment banking firm Salomon Smith Barney (SSB) has been sounding out potential buyers for this proposed sale.

Sources, however, say that potential buyers would be more comfortable if this is done with a tacit understanding on management issues with the existing promoter group at Strides Arcolab. Asked whether the promoters are open to bringing in a strategic partner, Mr Kumar said, “The promoters are not looking at roping any strategic partner and hence the question of a price does not arise. You may also note that as of date, there is no merchant banker, including SSB, who are advising the company in roping in any strategic partner into the business, nor does the company have any plans for roping in any strategic partner.”

Strides Arcolab, which had in the recent past brought Bombay Drugs and Pharma into its fold, had earlier merged Plama Laboratories and Remed Laboratories with itself.

It had also acquired a soft gelatin capsule manufacturing unit in New Jersey, USA.

Strides Arcolab registered a total income of Rs 165.7 crore for the year ended March 31, 2000, registering an increase of 52 per cent over the previous year.

Operating profits jumped 78 per cent to Rs 44.7 crore during the year.