On Friday, Piramal announced the sale of DRG, the healthcare focussed IT analytics firm, to Clarivate for $950M. With this, Piramal will receive $900M at the close of the deal and $50M 12 months after the deal closure. You can find the press release here. More interestingly, you can find, Clarivate’s presentation on the deal here
Coupled with the rights issue and CCD worth about $770M, Piramal will have raised around $1.6B in capital starting October 2019 (provided the Rights issue, underwritten by the promoters, go through successfully). In addition, the reliance away from commercial paper into longer term bank loans and the proceeds from the sale of STFC, will play a key role in improving the liquidity position and the balance sheet of Piramal significantly. Coupled with the fact that the D/E of the business was low, total construction finance book a little over $4.3B, it looks like the balance is finally tilting in Piramal’s favour that will allow it to wait out the downturn in real estate while opening up a few offensive moves.
While the opportunity cost might be high, Piramal has long been a counter-cyclical investor and time will tell whether he can extend this to a leveraged financial model.
Disclosure: Long Piramal.