On the heels of Lilliput, where marquee names like TPG and Bain Capital are stuck in a messy legal battle, Morgan Stanley Private Equity is staring at a Rs 200-crore (Rs 200-billion) loss.
Its first and only investment in India out of its Asia-dedicated fund has gone bad.
Biotor Industries, a Mumbai-based biofuel company, in which Morgan Stanley had picked a significant minority (over 30 per cent) stake in 2008, has ceased operations, according to two officials familiar with the development.
The investment was made out of the $1.5 billion dedicated fund for Asia, raised by Morgan Stanley Private Equity in 2007.
"The company has debt of around Rs 1,100 crore (Rs 11 billion).
Lenders have moved court and the promoters are in trouble," said one of the officials closely associated with the deal.
Even during the sub-prime crisis in 2007-08, a couple of big ticket deals such as Subhiksha and Vishal Retail ran into trouble.
Four years on, life has come a full circle as PEs are facing the threat of increasing lemons in their baskets as they fight a double whammy of poor global demand and high interest rates.
Indian banks are also facing a doubling of non-performing assets, according to credit rating agencies.
Biotor has been having issues for almost a year and has gone into corporate debt restructuring.
Earlier, when the company failed to achieve milestones in accordance with the share purchase agreement, the PE fund had raised its stake to 45
Volatile markets end in red
Shriram, TPG to buy Vishal Retail for Rs 100 crore
NSE, BSE to become facilitators for SME
GST: Industry to make case in Nov 28 meet
NSE in talks to launch Dow Jones options now