ICICI Venture in talks to buy stake in Micro Plastics

MUMBAI: Homegrown private equity fund ICICI Venture is in discussions to acquire a significant minority stake in Micro Plastics Pvt Ltd, a Bengaluru-based leading contract manufacturer and exporter of toys, model hobby kits and sports equipment, two people aware of the development said. Micro has been in talks with a few PE funds to sell 25-30% stake in the company in a deal worth Rs300 crore, said one of the persons cited above.

Investment bank Veda Corporate Advisors has been hired to find a potential buyer. Micro manufactures and exports 15 million toys and model kits annually to leading international toy companies like Hasbro (NERF, Playskool, Gamming, Star Wars), Hornby Hobbies, Spin Master, Chicco and Casdon. The company with a revenue of Rs 200 crore earns over 70% of revenue from toy exports to the US, the UK, Europe and Asian countries.

Other major customers of Micro Plastics include BOSCH, Stanley Black & Decker (power tools), Schneider Electric (electricals), TCS (electronics), Nokia (telecom), Kmatsu (heavy engineering), Toyota (automotives), and ELGI Ultra (appliances). At present, promoters including Vijendra Babu, Narasimha Kamath and Govindarajan Anbarasan hold 100% stake in the company. Email sent to Vijendra Babu, managing director at Micro Plastics, did not elicit any response while ICICI Venture spokesperson declined comment.

“At present, China is holding the lion’s share in global toy manufacturing industry. But India has been improving its market share with an angle of competitive pricing and innovative products,” said one of the persons cited above.

“The proposed fund will be used by Micro to expand its manufacturing capacity to meet the global demands.” Micro’s new Bengaluru facility has been approved by international retailers like Walmart, Disney and Amazon, and direct shipments are made to these stores in every part of the world, according to the company website. Aequs, a Bengaluru-based precision manufacturing company and competitor to Micro, is also expanding its toy manufacturing capacities in Bengaluru.

Last month, the Karnataka government had announced plans to set up nine clusters including manufacturing of mechanised toys in Koppal district, under its ‘Compete with China’ scheme. India’s plastics industry is one of the biggest in the world with a market size at Rs 1.8 lakh crore.

However, in toy manufacturing, India has a marginal presence where China commands 75-80% of the global toy export market, worth nearly $30 billion. Under four India Advantage Fund Series funds, ICICI manages a corpus of about $1.7 billion since 2002.

ICICI Venture is currently investing from India Advantage Fund Series 4, which is a sector agnostic private equity fund. ICICI Venture’s major PE portfolio include Ravi Jaipuria’s Devyani International, Adlabs Imagica, BTI Payments, Anthea Aromatics, Theobroma Foods, Go Fashion, DCB Bank and Team Lease.