FinTech PLUS Financial technology
The deal is reportedly in its final stage and is awaiting its approval by the Board and the committees of Piramal.
Sources suggest, If the deal gets confirmed the financial arm of Piramal might not continue remaining a subsidiary for long as both Piramal and Softbank is planning to build a big fintech platform, which will look forward to providing loans across the board.
Expected to close in about two months, this deal would peg the value of the financial services arm of Primal Group at more than $4 billion and the infused capital would be routed through $100-billion vision fund of Softbank.
Piramal Group is a 35-year-old diversified conglomerate and it is known to be among Fortune 500 companies. Of course, it also has presence across various sectors such as life sciences, healthcare,healthcare information management, drug discovery, specialty glass packaging, financial services and real estate.
The largest company of Piramal Group, Piramal Enterprises, was initially known as Piramal Healthcare Ltd and it was also ranked by Fortune 500 in the top-50 largest corporations throughout India. The group was ranked among the top 5 pharmaceutical contract manufacturers in the world by the UN Conference on Trade and Development’s World Investment Report 2011.
This well-established and well-networked feature of Piramal Group is supposedly a safe and secured choice for Softbank to realise its vision of having a huge fintech platform in India, as spending too much on marketing or technology will not be required to gain market share as Piramal already has substantial market share in it.
For quite a while Piramal Group itself has been looking to raise capital and as per what industry reports suggest, few investors are there who might be interested in infusing a large capital in all-cash deal. Piramal had divested its entire stake recently in Shriram Transport Finance Company, an asset financing firm for approximately Rs. 2,305 crores to raise growth capital for its financial services arm.
Piramal Group, in 2013 had acquired 10% stake in Shriram Transport Finance Company and it has also bought minority stakes in a couple of more Shriram group firms in the same year. This took his total investment group firms to Rs. 4,500 crores.
The Softbank-Piramal deal seems different from the usual business style of Masayoshi Son-led Softbank as it is not used to invest in listed companies in India. While, at Bombay Stock Exchange and National Stock Exchange both has Piramal Enterprises listed.
