MO Alternates, a subsidiary Motilal Oswal Financial Services on Tuesday said it has invested Rs 400 crore for a minority stake in Pan Healthcare Private Ltd (Pan Health), a Rajkot based manufacturer of hygiene products.

Pan Health plans to use funds raised for investing on brands and business expansion.

Pan Health sells baby diapers under the ‘Little Angel’ brand, adult incontinence products under the ‘Liberty’ brand, and sanitary napkins and feminine hygiene products under the ‘Everteen’ brand. Company also sells personal care products under brands such as ‘Neud’, ‘Mansure’ and ‘Naturesure’.

Established in 2016, Pan Health is one of the key domestic players in the hygiene products segment in the country.

The company has a pan-India distribution presence through a network of over 350,000 retail touch points and third party e-commerce channels, which is serviced through a state of the art manufacturing facility located at Rajkot.

The company is promoted by the Pan Group, a leading business house with diversified interests across varied segments including cement, cotton, steel, agri-trading, etc.

Orbit Financial Capital acted as the exclusive financial advisor to Pan Health on the transaction.“Our singular focus on offering the best quality product at competitive price points has enabled us to quickly establish ourselves as one of the top domestic brands in a highly competitive hygiene products category,” said Chirag Pan, promoter of Pan Health.

“The funds raised will be utilized for investing in the brand, ramping up the distribution infrastructure, and building a robust organization to help us drive the next phase of growth,” Pan said.

“The Indian hygiene products segment is significantly underpenetrated as reflected by per capita diaper consumption of less than 60 units versus 1,000 in US and 400 in China. The market has also been dominated historically by MNC brands with no large Indian brand so far,” said Vijay Dhanuka, director and head of consumer sector at MO Alts.

“We are reasonably confident that with its sharp focus on manufacturing excellence, and having delivered on its vision of creating a best-in-class manufacturing plant that surpasses even international setups, Pan Health will be able to address the above issues and create a huge impact in the personal hygiene space,” Dhanuka said.

Dhanuka added that the strategy of creating large scale operations, be it in manufacturing or in offline distribution through large feet-on-street workforce, will allow them to offer high quality products at competitive prices not just across tier II/ III cities but even rural areas.

MO Alts’ founded by Vishal Tulsyan, invests in underpenetrated categories, large distribution plays, and Indian manufacturing, along backing promoters that emerge from tier II/ III cities and create large economic outcomes.

MO Alts is managing both private equity and real estate funds and cumulatively manages around $1.7 billion between the two asset classes.

The private equity vertical focuses on providing growth capital to mid-market companies across its preferred sectors of consumer, financial services, life sciences and niche manufacturing, typically in the range of Rs 200 crore – Rs 500 crore. The private equity vertical has, in the last 16 years, made over 40 investments and has completely exited 15 investments, having delivered a gross multiple on invested capita; (MOIC) of 5.3x and gross internal rate of return (IRR) of 26.7%, making it one of the top performing platforms in India.