homebusiness Newscompanies NewsCipla promoters in talks to sell part stake to private equity firms, say sources
Cipla promoters in talks to sell part stake to private equity firms, say sources
Exclusive: Cipla’s promoters are in talks with private equity firms to sell a part of their total holding in the company, three independent sources with direct knowledge of the matter told CNBC-TV18.
Pharma major Cipla’s promoters are in talks with private equity firms to sell a part of their total holding in the company, three independent sources with direct knowledge of the matter told CNBC-TV18 on July 27. At present, The promoters own 33.47 percent stake in the company.
As per sources, an investment bank has been hired to advise on the deal and private equity (PE) firms like Blackstone and Baring Asia are amongst others that are in talks to explore a deal. This move comes as a step towards succession planning for the company, they indicated.
In response to CNBC-TV18's newsbreak, Cipla mentioned that the company is not aware of any event that require disclosures, and that it will make appropriate disclosures as and when the requirement arises.
“They are evaluating options for a strategic investor to come on board to revamp future strategy to enhance capital allocation and operational efficiency to improve return metrics,” one of the sources said.
The people cited above also suggest that with second generation promoters, YK Hamied and MK Hamied, Chairman and Vice Chairman respectively being octogenarians and only Samina Hamied from the third generation being part of Cipla as an Executive Vice Chairperson, company needs a clear road map on succession.
The promoters are “well-coordinated” and have been taking an active role in the company’s operations, a source said. “Succession issue has been a long standing concern at Cipla, the company needs a clear leadership plan. It has been often seen as a takeover candidate for this reason” the person said.
Cipla’s market capitalisation is over $10 billion, a 25 percent stake sale would require a large investment of over $2.5 billion.
The sources suggest that PE firms are trying to stitch together a consortium of investors to fund the large deal for a bigger chunk of the stake on offer.
The pharma sector is a sector of choice and any opportunity in the sector is attractive for private equity, especially after the success of KKR’s bet on JB Chemicals, a source said.
First Published: Jul 27, 2023 1:15 PM IST
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