Carlyle to buy 20% of Piramal's India pharma business

The transaction values Piramal Pharma at $2.78 billion, with an upside component of up to $360 million depending on the company's performance over the coming year, according to a statement. The size of Carlyle's commitment – from the firm's fifth Asia buyout fund, which has a corpus of $6.55 billion – could vary based on exchange rates and the target's net debt and performance.

Piramal Enterprises has been involved in the pharmaceutical industry for 30 years. Having sold its domestic business to Abbott Laboratories for $3.8 billion in 2010, the company has rebuilt and grown its assets. Pharmaceuticals revenue came to INR54.2 billion for the 12 months ended March, up from INR15.4 billion in 2011, with EBITDA rising from INR1.1 billion to INR14.4 billion.

Assets held by Piramal Pharma include: Piramal Pharma Solutions, a contract development and manufacturing organization (CDMO) with 13 facilities in Asia, North America and Europe; Piramal Critical Care, a manufacturer of anesthetics, a range of generic injectable drugs, and plasma volume expanders for customers in 100 countries; an over-the-counter consumer healthcare products business; and investments in the Allergan joint venture and Convergence Chemicals.

Ajay Piramal, chairman of Piramal Enterprises, said of the investment: "This is an affirmation of the strength of our ability to build new, attractive and scalable businesses with a significant runway for continued organic growth and opportunities for consolidation. This infusion of funds will further strengthen our balance sheet and provide us with a war chest for the next phase of our strategy."

Neeraj Bharadwaj, a managing director at Carlyle, added that there are opportunities for organic and inorganic growth in each of the major segments with the Piramal Pharma portfolio.

Should the private equity firm invest the full $490 million, it would represent the largest PE investment in India's healthcare space, according to AVCJ Research. The top spot is currently held by Sun Pharmaceutical Industries, which received $488 million from GIC Private and Temasek Holdings in 2015.

Carlyle's existing exposure to Indian healthcare includes Medanta Medicity Hospital and diagnostics chain Metropolis Healthcare. In May, it agreed to acquire up to 74% of Mumbai-based animal healthcare services company SeQuent Scientific for an enterprise valuation of $284 million. The first part of the deal comprised the purchase of a 44.92% stake from the controlling shareholders, plus 5.69% from existing investor Ascent Capital. This triggered a mandatory offer for a further 26%.

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• Topics
• South Asia
• Healthcare
• Expansion
• India
• The Carlyle Group
• Pharmaceuticals