MUMBAI: The Piramal Enterprises board on Thursday approved a proposal to demerge the pharmaceutical business, which would result in two separate listed entities exclusively in the pharma and finance business.
Shareholders of Piramal Enterprises (PEL) will get four shares of Piramal Pharmaceuticals (PPL) for every one share they hold. Two operating subsidiaries of PPL will also be amalgamated with their parent.
The consolidation follows the group’s acquisition of DHFL. Piramal Enterprises will transform into a large listed NBFC with PHL Fininvest Private merging with the parent. The merged housing finance company, after the DHFL acquisition, will remain a wholly owned subsidiary of Piramal Enterprises.
“PEL is transforming itself from a multi-sector conglomerate structure into two separate sector-focused listed entities in financial services and pharmaceuticals. The demerger is expected to unlock significant value for PEL shareholders. Both listed entities will have a leadership position in their respective sectors,” the group said.
“This will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity,” said Ajay Piramal, chairman, Piramal Group.
Currently, PEL owns the financial services business through four investments verticals - housing finance, lending, alternatives and investments (Shriram group companies). PEL also has a 80% stake in Piramal Pharma which owns Convergence Chemicals Hemmo Pharmaceuticals and stake in a joint venture with Allergan. PPL also has overseas subsidiaries.
Post-restructuring, PEL’s shareholders will directly own PPL which will absorb the two subsidiaries and own the joint venture with Allergan and overseas subsidiaries. PEL will absorb the NBFC lending business and own the housing finance company, alternatives business and investments in Shriram.
Piramal Alternatives, the fund management business, provides customised financing solutions to high-quality corporates through – ‘Piramal Credit Fund’ and ‘IndiaRF’ (a distressed asset investing platform with Bain Capital Credit).
The financial services business contributes Rs 7,033 crore or 55% of the group’s revenues with Pharma contributing the balance 45% (Rs 5,776 crore). The financial services business post-consolidation will have a Rs 65,000 crore loan book.
