Days after selling its healthcare analytics unit Decision Resources Group for $950 mn, billionaire Ajay Piramal-led Piramal Enterprises is now looking to raise around $500 mn by divesting a minority stake in its pharma business and has appointed advisors for the fresh fund raise, sources with knowledge of the matter told Moneycontrol.
"Investment bank Rothschild has been mandated by Piramal Enterprises to sell around 20% stake in the pharma vertical. The deal values the pharma business at $2.5 billion and is aimed at raising growth capital and strengthening the groups’ balance sheet which has come under pressure due to the cash guzzling NBFC business. Information memoranda have been circulated and non-binding bids for the transaction are expected in the third or fourth week of February,” said a source.
"Bulge bracket private equity funds and sovereign wealth funds from Asia and the Middle East are expected to participate and submit bids for this transaction. The wealth funds have a much longer investment horizon and come without any early exit pressure. The PE funds would be keen on the kind of rights they get along with the minority stake in terms of board seats,” added another source.
The pharma segment contributed Rs 4,786 crore or 36% of the group’s revenues of Rs 13,215 crores in FY19, registering a YoY growth of 11%. A major chunk of the pharma revenues comes from the niche businesses of complex generics and contract development and manufacturing operations.
In an interview with CNBC-TV18 on December 17, Nandini Piramal, Executive Director, Piramal Enterprises, said the group was planning to sell a 20 percent stake in the pharma business to raise funds to pursue acquisitions in the sector in the first half of 2020. The move is in line with the company's plan to demerge the pharmaceutical and financial services businesses and eventually list onto the exchanges, she added.
On January 17, 2020, Piramal Enterprises announced the sale of Decision Resources Group to US-based Clarivate Analytics Plc. The group had initially invested $650 million in 2012 to acquire DRG, of which $260 million was infused as equity. It realised 2.3 times its initial equity investment in rupee terms with the sale.A Piramal Enterprises spokesperson declined to comment in response to an email query from Moneycontrol. Moneycontrol is awaiting a response from Rothschild.