Piramal Enterprises Ltd () on Thursday said its board has approved the restructuring of its business to demerge its financial services and pharmaceuticals businesses into two separate listed entities.

The pharmaceuticals business will get vertically demerged from Piramal Enterprises and consolidated under Piramal Pharma Ltd (PPL), the group said in a statement.

Two operating subsidiaries will also be amalgamated with Piramal Pharma, to further simplify the pharma corporate structure.

PHL Fininvest Pvt Ltd, the non-banking financial company (NBFC) will be amalgamated with Piramal Enterprises Ltd to create a large listed NBFC, the group said. The merged housing finance company, post the DHFL acquisition, will remain a wholly-owned subsidiary of Piramal Enterprises.

Shareholders of Piramal Enterprises (PEL) will get four shares of PPL for every one share in PEL, in addition to their existing holding in PEL.

Ajay Piramal, Chairman of Piramal Enterprises in an interview to ET said the demerger was done to simplify the corporate structure and is expected to unlock significant value for PEL shareholders

“The shareholders wanted two independently run and focused companies rather than having a mixed financial services and pharma,” Piramal said.

“Both these companies are well capitalised. There is runway for growth for both of them, through organic and acquisitions. Things will be much more transparent. Our shareholders will know what is happening in each company in detail,” Piramal added.

Pharma in focus

Nandini Piramal, the Executive Director of Piramal Enterprises Limited said the Piramal Pharma is now in a position to scale up business.

“We are a large pharma company again in India, we have the ability with Carlyle (investment) to do acquisitions as well as organic ground field expansion,” Piramal said.

Piramal said the company is growing its revenues at 14 percent CAGR in the last 10 years.

Piramal Pharma would include an end-to-end CDMO business, a complex hospital generics business, selling specialised products in over 100 countries and a consumer products division that sells over-the-counter products in India.

A joint venture investment with Allergan India to make ophthalmology products in the domestic market.

The pharma business contributed about Rs 5,776 crore or 45 percent of total revenues in FY21 for PEL, registering a 7 percent growth. The EBITDA of the pharma business stood at 22 percent.

In one of the largest PE deals in the Indian pharma sector, Piramal raised Rs 3,523 crore from Carlyle in June 2020, since then it has been active in deals, especially to expand its CDMO capabilities.

The company has acquired a solid oral dosage facility in Sellersville, Pennsylvania, in June 2020.

It also agreed to acquire Hemmo Pharmaceuticals in March 2021, adding peptide API development and manufacturing capabilities for an upfront consideration of Rs 775 crore and milestone-linked earn-outs. Piramal also acquired its share in the joint venture of Navin Fluorine International, to have control of fluorochemicals, which are intermediates used in for certain hospital generics the company markets.


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