US-based Carlyle Group has agreed to buy a 20 per cent stake in the pharmaceutical unit of Piramal Enterprises for about $490 million (Rs 3,700 crore), the companies said on Saturday. Piramal Pharma will use the capital injection to accelerate its organic and inorganic growth plans, the statement said.
The investment comes a month after the private equity firm bought a majority stake in Indian animal healthcare company SeQuent Scientific.
“India is a hugely strategic part of Carlyle’s Asia business, and a market where we continue to see many attractive investment opportunities,” Greg Zeluck, co-head of Carlyle Asia Partners’ advisory team, said.
Reports suggest US private equity firms TA Associates and KKR & Co Inc had also submitting offers for the stake.
The transaction translates into an enterprise value of $2,775 million (Rs 20,904 crore) for the pharma business.
Piramal Enterprises added that there is an upside component of up to $36 million depending on its performance during the current fiscal.
It added that the final amount of equity investment will depend on the net debt, exchange rate and performance against the pre-agreed conditions at the time of closing the deal.
The transaction is expected to close in 2020.
In 2010, Ajay Piramal had sold the pharmaceutical business of Piramal Healthcare for Rs 17,500 crore. Since then he has been gradually scaling up the business, particularly in domestic formulations.
Recently, the pharma solutions business had entered into a pact with G&W Laboratories to acquire its solid oral dosage drug product manufacturing unit at Sellersville in the US for $17.5 million (Rs 130 crore).
The company now has manufacturing capabilities across 13 global facilities and a distribution network in over 100 countries.
Piramal Enterprises told bourses that it will transfer the pharmaceutical business held directly and through its wholly owned subsidiaries to Piramal Pharma, which will be a wholly owned subsidiary.
Carlyle will be investing in this arm.
Speaking to reporters, chairman Ajay Piramal said the pharma business will also be listed in the near future.
