Piramal separates from its pharmaceutical business to go public
Piramal Enterprises Ltd. (PEL), headed by Ajay Piramal, has separated its pharmaceutical business to be listed on the stock exchange as a separate entity. The group will have two separate listed companies in financial services and pharmaceuticals as part of a corporate restructuring exercise. The board of directors on Thursday approved a composite plan of arrangement.
PEL, which last week acquired the country’s second largest housing finance company, Dewan Housing Finance (DHFL), will transform into a large, diversified, listed NBFC focused on retail and wholesale finance with a consolidated loan portfolio of 65,000 crores.
The pharmaceutical activity will be separated from PEL and will be consolidated in Piramal Pharma Ltd. (PPL). Hemmo Pharma Pvt. Ltd. (focused on peptide API development and manufacturing capabilities) and Convergence Chemical Pvt. Ltd. (set up for the development, manufacture and sale of specialty fluorochemicals), will merge with PPL to create a consolidated listed pharmaceutical entity.
“Over the years, Piramal Enterprises has grown several times with various companies under a listed holding company structure. In line with our stated strategy, the Board of Directors approved the split and simplification of our corporate structure, in order to create two independent listed entities in financial and pharmaceutical services, with a leading position in all sectors of activity in which they operate, ”said Ajay Piramal, President, Groupe Pyramidal.
Investors will get four shares with a paid-up value of 10 each in PPL for each share held in PEL.
PPL will be one of the largest listed pharmaceutical companies in India, present, among others, in the Contract Development and Manufacturing Organization (CDMO) and Complex Hospital Generics (CHG) areas.
Piramal Enterprises said pharmaceutical business revenue grew 3.8 times over the past 11 years, at a CAGR of 14% to 5,776 crore during FY21, while EBITDA was multiplied by 13 at a CAGR of 28%. The company has completed nearly 15 M&A deals valued at over 4,000 crore since it sold its formulation division to Abbot Laboratories in 2010.
PPL has manufacturing capabilities in 15 global facilities and a distribution network in over 100 countries. PPL’s CDMO business is among the top three in India and the 13th in the world. Its CHG activity targets hospitals, surgical centers and veterinary centers with a portfolio of inhalation anesthetics, and ranks among the top four in the world. It also owns a consumer health business with 21 brands across multiple categories and includes products like Saridon, Littles, I-pill, Lacto, and more.
PEL will merge PHL Fininvest Pvt. Ltd. with PEL to create a listed entity of non-bank financial services (NBFC). The merged housing finance company (HFC) after the acquisition of DHFL will remain a wholly-owned subsidiary of PEL. Through this split and simplification of the corporate structure, the shareholders of PEL will directly hold shares in the two listed entities, without cross-participation or minority participation. PEL will continue to own 100% of the capital of HFC (merged with DHFL) and will focus on financing affordable housing.