Already a stakeholder in almost every top-notch startup of India, Japan’s SoftBank is now reportedly all set to finalize a massive US$1 billion deal by investing $1 billion in Mumbai-based Piramal Enterprises’ financial services arm, which primarily deals in wholesale and corporate debt.
The deal is in final stage and yet to be approved by the Board or any of the Committees of Piramal.
According to a report by Business Standard, if the deal happens then the financial arm of Piramal will not remain a subsidiary much longer as both Softbank and Piramal is planning to set up a big fintech platform, which will look to give loans across the board.
The deal, which is expected to close in about two months, would peg the value of the financial services arm of Piramal Group at over $4 billion, and the capital infused will be routed through Softbank’s $100-billion vision fund.
“The two sides have been locked in conversation for a few weeks now and the handshake agreement was done earlier last week. The last details of the due diligence process are pending and the deal is officially expected to close in about two months.”
A 35-year-old diversified conglomerate, Piramal Group is among Fortune 500 companies and has presence across various sectors such as healthcare, life sciences, drug discovery, healthcare information management, specialty glass packaging, financial services and real estate.
Piramal Enterprises, the largest company of Piramal Group, was formerly known as Piramal Healthcare Ltd, was ranked by Fortune 500 in the top-50 largest corporations across India. The UN Conference on Trade and Development’s World Investment Report 2011 ranked the group among the top 5 pharmaceutical contract manufacturers in the world.
This well networked and already-established feature of Piramal Group is a safe choice for Softbank to realise its ambition of having a big fintech platform in India, as it won’t have to spend too much on marketing or technology to gain market share as Pirramal is already has substantial market share in it.
Piramal Group itself has been looking to raise capital for a while and according to industry reports, there are very few investors who could infuse a large capital in all-cash deal. To raise growth capital for its financial services arm, Piramal had recently divested its entire stake in asset financing firm Shriram Transport Finance Company for approximately Rs 2,305 crore.
It was in 2013 when Piramal group had acquired 10% stake in Shriram Transport Finance Company.and in the same year it also purchased minority stakes in two more Shriram group firms, taking his total investments in the group firms to Rs 4,500 crore.
Notably, the possible Softbank-Piramal deal is different from Masayoshi Son-led SoftBank’s usual business style. as it do not traditionally invest in listed companies in India. While, Piramal Enterprises is listed at both Bombay Stock Exchange and National Stock Exchange.