The Carlyle Group which is a global private investment firm has emerged as the frontrunner to buy a significant stake in Ajay Piramal-owned Piramal Group’s pharma businesses for close to ₹3,500 crores. The Carlyle Group is one of the world’s most successful investment firms and has a net asset of $195 billion. The news of the proposed stake sale has already attracted bids from several other global investors towards the pharma business. On 7th April American private equity giants, TPG Capital and KKR & Co. Inc. too were looking to invest ₹3,500-4,000 crores for acquiring a 20 percent stake in Piramal Group’s proposed pharmaceutical entity that would combine the group’s pharma businesses.
The new strategy of the company is to demerge the pharma business from Piramal Enterprises Ltd. and combine into a new entity, 20 percent of which will be owned by Carlyle and possibly another private equity investor, while at least 25 percent will be owned by the public and the remainder will remain with the promoters. Piramal is receiving all the advice regarding this investment from Investment bank Rothschild. Once the stake scale is completed Piramal Group’s overall pharma business may be valued at approximately $2.5 billion.
Over the past few months, Piramal Group has been in discussions with several potential investors for a stake sale in its pharma business. They are planning to demerge all pharma businesses and bring them under a single subsidiary so that they would be able to list each company separately on the stock exchanges. They are trying to raise capital to bring down group and promoter level debt. They also intend to expand its pharma business globally. As demand for pharma, health care products, and services has seen a drastic increase amid the COVID-19 crisis which has contributed to the rise in the share price of Piramal.
Since the lockdown from March 25 in the wake of the COVID-19 crisis, Piramal’s stock has shot up by a massive 93 percent from ₹682.10 to ₹1,316 apiece on BSE, as of 1:57 pm on Thursday. Piramal Enterprises Ltd (PEL) has four pharma businesses under its flagship namely Piramal Pharma Solutions, Piramal Critical Care, Customer Products Division, and Phytomedicines business. PEL also owns several other businesses in the financial services space. They also have a non-banking financial company which is under pressure due to the liquidity crisis in the NBFC sector.