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Piramal sells insights unit for $950 million to raise finserv funds

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Mumbai: Piramal Enterprises Ltd will use the proceeds from the sale of its healthcare insights and analytics business to expand its financial services vertical, seeking to take advantage of opportunities created by the liquidity crisis in the non-banking financial company (NBFC) space, said Piramal Enterprises chairman Ajay Piramal.

On Friday, Piramal Enterprises informed the stock exchanges that it was selling its healthcare insights and analytics business, Decision Resources Group (DRG), to NYSE-listed Clarivate Analytics Plc. for $950 million.

DRG specialises in enabling the world’s leading pharma, biotech and medical technology companies to achieve commercial success in complex health markets with effective patient-centric commercial strategies.

In 2012, it had invested $650 million to acquire DRG, of which $260 million was equity. It realized 2.3 times the investment in rupee terms.

6,500 crore of total enterprise value of the company and that amount will come into the balance sheet. This money will go into the financial services business. I made a commitment in the earlier part of the year that we will raise around 8,000-10,000 crore equity in the company, so now we have exceeded that,” Piramal said over the phone.

Besides, it is raising a 3,650-crore rights issue, and another 1,750 crore through a preferential allotment to Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ).

Piramal said the capital will be used to grow and diversify its lending business, Piramal Capital and Housing Finance. It will also look at inorganic growth opportunities. “As I look at the financial services sector, I see consolidation taking place in the NBFC space, which means that the larger ones and the stronger ones will become stronger. In the environment today there are not that many NBFCs that are lending so there are opportunities that we will have. We have always said that we want to make our book more diversified, more granular and this will help us in doing that,” said Piramal.

It will also look at the inorganic route for its re-entry into the domestic formulations business, which it exited in 2010 by selling it to Abbot Laboratories for $3.7 billion.

“We have always said that the domestic formulations business should be at a reasonable value. As and when something like that comes, we will do it. We will do the domestic formulations play through the inorganic route,” said Piramal.

DRG contributed 10% to the group’s revenue in FY19. It saw revenue 14% yoy growth to 652 crore in H1FY20.

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