NEW DELHI: US-Based investment firm Carlyle Group is all set to buy a 20 per cent stake in Piramal group-owned drug manufacturer: Piramal Pharma. According to a joint statement from Ajay Piramal-led Piramal Enterprises and the Carlyle Group, the transaction values Piramal Pharma at an enterprise value of $2.775 billion (Rs 20,980 crore) and the value of the investment from Carlyle for the 20 per cent stake would be around $490 million, or around Rs 3,705 crore. “... CA Clover Intermediate II Investments, an affiliated entity of CAP V Mauritius Ltd, an investment fund managed and advised by affiliated entities of The Carlyle Group Inc has agreed to invest fresh equity capital for a 20 per cent stake in Piramal Pharma Ltd...,” the statement said, adding that the capital raised from the sale would be used to accelerate Piramal Pharma’s organic and inorganic growth plans going forward.
While the enterprise value has been pegged at $2.775 billion, this also includes an upside component of up to $360 million (over Rs 2,720 crore) based on the company’s FY21 performance. However, the equity capital investment has been pegged after excluding the upside component to arrive at $490 million (around Rs 3,705 crore). The final amount of equity investment will depend on the net debt, exchange rate and performance against the preagreed conditions at the time of closing of the deal, with is expected to happen before the end of 2020.
After the deal, group holding firm Piramal Enterprises will be left with an 80 per cent stake. “This is an affirmation of the strength of our ability to build new, attractive and scalable businesses with a significant runway for continued organic growth and opportunities for consolidation,” Piramal Enterprises Chairman Ajay Piramal said, adding that the investment will provide the company with a war chest for the next phase of its growth.
“This fresh growth investment into our pharma business will be used as growth capital for the pharma usinesses to expand capacity across our sites as well as to tap attractive acquisition opportunities within and outside India. In the interim, the proceeds from this capital raise may also enable us to further strengthen our balance sheet through deleveraging in the near term,” said Nandini Piramal, Executive Director of Piramal Enterprises. “Given global pharma industry trends, we see attractive opportunities for organic as well as inorganic growth in each of (Piramal Pharma’s) businesses,” noted Carlyle Asia Partners advisory team managing director Neeraj Bharadwaj.
ENTERPRISE VALUE While the enterprise value has been pegged at $2.775 billion, this also includes an upside component of up to $360 million (over H2,720 crore) depending on the company’s FY21 performance