Carlyle to pick up 20 pc stake in Piramal pharma business for $490 million

The Carlyle Group has agreed to pick up 20 per cent stake in Ajay Piramal's pharma business for 490 million dollars (about Rs 3,698 crore), making it one of the largest private equity deals in the Indian pharmaceutical sector.

The deal is expected to close this year, subject to customary closing conditions and regulatory approvals, Piramal Enterprises said in a statement on Saturday.

The transaction values Piramal Pharma at an enterprise value of 2.7 billion dollars with an upside component of up to 360 million dollars depending on the company's FY21 performance. Carlyle will make the investment through CA Clover Intermediate II Investments, an affiliated entity of CAP V Mauritius Ltd.

"This is an affirmation of the strength of our ability to build new, attractive and scalable businesses with a significant runway for continued orgc growth and opportunities for consolidation," said Chairman of Piramal Enterprises Ajay Piramal.

"This infusion of funds will further strengthen our balance sheet and provide us with a war chest for the next phase of our strategy," he said in a statement.

Executive Director of Piramal Enterprises Nandini Piramal said the fresh growth investment will be used as growth capital for pharma businesses to expand capacity across our sites as well as to tap attractive acquisition opportunities within and outside India.

Piramal Pharma will include Piramal Pharma Solutions -- an end-to-end contract development and manufacturing business, Piramal Critical Care -- a complex hospital generics business selling specialised products across over 100 countries, Consumer Products Division -- a consumer healthcare business selling over-the-counter products in India, Piramal Enterprises' investment in the joint venture with Allergan India -- a leader in ophthalmology in the domestic market -- and Convergence Chemicals Pvt Ltd.

"In the interim, the proceeds from this capital raise may also enable us to further strengthen our balance sheet through deleveraging in the near term," she said.

Piramal Enterprises said it has demonstrated a three-decade track record of growth and re-invention in pharma. Following the sale of its domestic pharma business to Abbott in 2010 for 3.8 billion dollars, the company has demonstrated its ability to build a solid and resilient pharma business over the last 10 years.

Leveraging its differentiated business model and strong quality track record, the company's pharma revenue since the Abbott deal has grown 3.5 times at a CAGR of 15 per cent from Rs 1,537 crore in FY11 to Rs 5,419 crore in FY20.

Carlyle has invested more than 2.5 billion dollars in India as of March 31, 2020. Notable investments in India include SBI Life, SBI Card, HDFC, India Infoline, Delhivery and PNB Housing Finance.

( With inputs from ANI )