Pharma giant Cipla promoters are in talks with major private equity (PE) players to sell a part of their total holding in the company, sources were quoted as saying by Moneycontrol.
Sources further revealed that the pharma company has also hired an investment bank to advise on the deal. The company is in talks with Blackstone, Baring Asia among others to explore the deal.
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According to sources, the promoters own 33.47 percent stake in Cipla and this move is considered as planning for succession.
“They (promoters) are evaluating options for a strategic investor to come on board to revamp future strategy to enhance capital allocation, operational efficiency to improve return metrics,” one of the sources was quoted as saying by Moneycontrol.
The second generation promoters, YK Hamied and MK Hamied, Chairman & Vice Chairman Cipla, respectively being octogenarians and Samina Hamied, Executive Vice Chairperson, being the only member from the second generation to lead Cipla, the company needs a clear road map on succession, the Moneycontrol report said.
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“Succession issue has been a long standing concern at Cipla, company needs a clear leadership plan. It has been often seen as a takeover candidate for this reason," one of the sources said.
Sources further added that with Cipla’s market capitalisation being over $10 billion, a 25% stake sale will require a large investment of over $2.5 billion.
Cipla on Wednesday reported a 45.1% year-on-year (YoY) jump in net profit to Rs 996 crore in the quarter ended June 30, 2023, led by sales growth across key geographies of US, India and South Africa. The company reported a net profit of Rs 686 crore during the corresponding quarter of the previous year.
The shares of Cipla were also trading nearly 10% higher, ending at Rs 1,173 per piece on BSE, in Thursday’s session.