Piramal Enterprises sells healthcare analytics business for $950 million

The $2.2 billion Piramal Group, with interests ranging from pharmaceuticals to financial services and real estate, is selling its healthcare insights and analytics business for a consideration of $950 million, the group announced on Friday.

Piramal Enterprises (PEL), the flagship listed firm of the Mumbai-based business house, has agreed to sell PEL DRG Dutch HoldCo BV, a wholly owned subsidiary, to Clarivate Analytics Plc. Clarivate is a $5 billion company listed on the New York Stock Exchange, which provides insights and analytics. PEL DRG is the holding company for Piramal’s DRG (decisions resources group) business.

PEL will get $900 million upon successful close of the transaction, which is subject to approvals. It will get another $50 million at the end of 12 months from the date of the transaction closing. PEL had initially invested $650 million to acquire DRG in 2012, out of which $260 million was infused as equity. The company has realised a 2.3x return on its initial equity investment into the company, PEL said in a statement issued on Friday afternoon.

The deal will give PEL access to much needed capital to keep its financial services business stable and help it grow further. Non-banking finance companies (NBFC) like Piramal Capital and Housing Finance (PCHF), which is a PEL subsidiary, have found it difficult to raise capital and grow their business following the collapse of IL&FS (Infrastructure Leasing and Financial Services). Since NBFCs borrow short-term to lend long-term (for purposes such as real estate finance, housing loans and vehicle loans), it is imperative that they continue to rollover debt from time to time to keep the business running. Many NBFCs have found it difficult to do so.

“We are pleased to have grown DRG to market leadership over the last few years and believe that through this combination, Clarivate, with its size and scale, is well positioned to further accelerate DRG’s growth potential,” Piramal Group chairman Ajay Piramal said in the statement. “Along with the equity capital raise in PEL, this transaction not only further strengthens the company’s balance sheet but also marks another step towards significantly unlocking value in the future.”

In October, PEL said that its board had approved a fundraising plan to the tune of ₹5,400 crore through a rights issue and preferential allotment of compulsorily convertible debentures. It was also reported last week that PCHF had raised ₹1,400 crore as debt from a clutch of domestic banks to service existing debt and continue its lending operations. According to a report in The Economic Times, PEL has raised around ₹24,000 crore in the last one year.

Over the last one year, PEL’s stock price has nearly halved; while the S&P BSE Sensex has risen around 15.3%. On Friday, PEL's share price ended at ₹1,627.05 apiece on the BSE, up 5.18% over its previous close. The S&P BSE Sensex was up 0.03% at 41,945.37 points.