Piramal Enterprises Ltd has agreed to sell healthcare analytics unit Decision Resources Group to US-based Clarivate Analytics Plc for $950 million (about Rs 6,745 crore).
The billionaire Ajay Piramal-led company will get $900 million when the deal closes and the remaining $50 million after one year, it said in a statement on Friday. The deal is likely to be completed by February 28, Piramal said.
Piramal had acquired Decision Resources Group in 2012. It said that it had initially invested $650 million to acquire DRG. Of this, $260 million was infused as equity. The company has realised 2.3 times its initial equity investment in rupee terms.
This was the biggest-ever acquisition then by Piramal, which was diversifying into businesses beyond pharmaceuticals.
Piramal Enterprises chairman Ajay Piramal said that, along with the ongoing equity capital raise by the company, this transaction not only strengthens the company’s balance sheet but also marks another step towards significantly unlocking value in the future.
The revenue from the healthcare insights and analytics business was Rs 1,330.74 crore ($187.34 million) for the financial year ended March 31, 2019, the statement added.
For the proposed transaction, the board will convene a general meeting on February 13 to seek approval of the shareholders of the company.
DRG specialises in enabling the world’s leading pharmaceutical, biotech and medical technology companies to achieve commercial success in complex health markets with the creation of effective patient-centric commercial strategies.
Clarivate Analytics, a business worth over $5 billion (about Rs 35,513 crore), provides insights and analytics to accelerate the pace of innovation in its target verticals. This acquisition will help it to improve the commercialisation of life-changing therapies.
Clarivate executive chairman and CEO Jerre Stead said this is a “milestone acquisition” which doubles the size of the company’s life sciences business and increase total revenue by 20%. “(The deal) sets us up to become an essential, end-to-end, industry-leading data and analytics provider to the highly attractive life sciences ecosystem.”
Piramal's deleveraging plans
The divestment is part of the Piramal group’s deleveraging exercise and comes after the recent fundraising of Rs 1,750 crore ($250 million) from one of Canada’s biggest public pension funds, Caisse de depot et placement du Quebec (CDPQ), via a preferential allotment last month. The infusion was part of larger fundraising worth Rs 5,400 crore ($770 million) that will include a rights issue.
Piramal Enterprises is the largest business of the Piramal group and is engaged in pharmaceutical and financial services including wholesale and retail funding across various sectors including real estate.
In June 2019, Piramal Enterprises sold its stake in Chennai-based Shriram Group's Shriram Transport Finance for Rs 2,300 crore. It is also looking to exit Shriram Capital Ltd, in which it holds a 20% stake.
Further, Piramal Enterprises was also in talks to take over the retail loan book of an embattled large group's housing finance company.
Meanwhile, The Economic Times reported that Piramal Enterprises has raised Rs 1,400 crore from IndusInd Bank, United Bank of India and Bank of India to service its debt obligations and also for lending purposes through its financial arms.