InvestorQ : What is the value addition for Carlyle to pick up a stake in Piramal Pharma business?
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What is the value addition for Carlyle to pick up a stake in Piramal Pharma business?

Answer
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3 months ago


Global PE Fund, Carlyle, will pick up a significant minority stake in the pharma business of the Piramal Group. Carlyle is expected to pay $490 million for a 20% stake in the pharma franchise of Piramal Group, valuing the business overall at Rs.20,000 crore or $2.6 billion. This deal was expected and PEL has already rallied 50% on deal expectations. KKR was also in the fray but Carlyle managed to better the other bids.

For Carlyle, this represents the second major pharma transaction in the last few months. Earlier, it had bought into Sequent Scientific, India’s largest pure-play animal healthcare company. Carlyle has clearly shown an appetite to partner with top notch pharma and healthcare companies. Earlier, Carlyle also backed Metropolis Health and Medanta.

For Piramal, Carlyle brings its strong experience in the pharmaceutical services sector. Globally, it has invested in Albany Molecular Research (AMRI), a company engaged in contract research, development and manufacturing organization. It also invested in Ambio, a global pharmaceutical ingredient manufacturer. This expertise could be invaluable.

For Piramal Enterprises this is also a method to monetize its pharma properties after its financial services business came under pressure like most of its peers after asset stress and defaults started rising. This had led to a sharp fall in the stock price. This sale will allow PEL to create a war chest and also reduce the stress on its financial services business. PEL’s balance sheet had been impacted by exposure to real estate developers.