Carlyle buys 20% stake in Piramal Pharma

Global private equity major the Carlyle Group acquired a 20% stake in Ajay Piramal-owned Piramal Group’s pharmaceutical business for Rs 3,700 crore. The proposed transaction values the pharma business at an enterprise value of $2.78 billion or Rs 18,500 crore.
Through this stake sale Piramal Enterprises, the owner of Piramal Pharma, hopes to achieve its business expansion strategy.

The proceeds from stake sale will be utilised for pharma acquisitions, expanding existing manufacturing operations and repaying debt.
The company is looking at a range of pharma assets in India and abroad that include branded formulations, manufacturing sites, complex hospital generics and even possibly entering vaccines.
It will also consider doing organic capital investments, in its plants to improve capacity and to better serve its customers, patients.
Ajay Piramal, Chairman of Piramal Enterprises, believes that there are many acquisition options available in pharma. Piramal favours listing of the Pharma company at right time.

Piramal Pharma includes an end-to-end contract development and manufacturing (CDMO) business, a complex hospital generics business selling specialized products across over 100 countries; consumer products division that sells over-the-counter products in India, an investment in the joint venture with Allergan India, to make ophthalmology products in the domestic market and Convergence Chemicals, a joint venture with Navin Fluorine International to make fluorochemicals.

The pharma business had revenues of Rs 5,419 crore in FY20, with an EBITDA margin of 26%.
Piramal in FY20 raised raised Rs 14,500 crore of additional capital through asset sales and fund raising including the sale of healthcare insights and analytics subsidiary Decision Resources Group (DRG) to US-based Clarivate Analytics for a sale consideration of $950 million in January this year.
Its debt-to-equity ratio stood at 2.6 times versus 3.9 times a year ago.
Piramal sold almost all of its domestic pharma business to Abbott in 2010 for $3.8 billion, following which it rebuilt the business over the last 10 years.

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