ICICI Venture's novel plan for Ranbaxy units

ICICI Venture Funds Management Company is planning to offer equity to the management team of the Rs 130 crore (Rs 1.3 billion) allied businesses of Ranbaxy Laboratories, which it had acquired recently.

Following a unique business model, ICICI Venture is involving the senior management by giving them part-ownership of the business to ensure the continuity of operation and better performance.

This would help the fund to successfully run the business till it could find a potential buyer with better valuation, said a source close to the deal.

As per the equity sharing model planned by ICICI Venture, the manager stake holders will be entitled to share the profit when ICICI Venture sells the three units -- fine chemicals, animal health and diagnostics division ICICI Venture has identified a 11-member team in the senior management to have equity partnership in these businesses.

The 11-member management team includes Sushil Mehta, director (allied business), Ranbaxy Laboratories, and other senior managers such as Govind Rajan, Veena Kohli, Subratho Mukherjee and Rajeev Goutham.

An ICICI Venture source said the deal would be worked out over the next two weeks once the company signs the final agreement with Ranbaxy over the change of ownership.

"We are working out the size and the valuation of equity to be allocated to the management team," he added. Sources said that though ICICI acquired the three businesses in a single deal, it wanted to divest the businesses as three separate entities over the next two years.