My rationale was to understand how did you decide to go for a 19% stake in a biz whose promoter might be exiting? Your entry seemed very recent so I assumed you might have had some idea of this news.
Now that I look at your answer and research more on the news, I think maybe I was wrong and the news broke out publicly after your purchase. I should have phrased my original question better.
Second why only sell to black stone only
I don’t know. We have to wait and find out from the management
Given how big Cipla is, there aren’t many organizations that could purchase such a large stake.
@ChotuKatappa now can you drill down to check and tell me
how is the Blackstone management
Do they understand the pharma complexities
Did they ever manage pharma companies and if so did they likely succeed
Blackstone(BS) is a very large asset management firm with multiple businesses under their head.
The management quality is debatable. I have my reasons to have a neutral view of them (maybe even slightly negative). Maybe this is why I was excited to see your 19% stake.
For example: One of the companies I am invested in, was bought by BS and sold within a few years without any significant shareholder value (if I am not mistaken some investors lost wealth). The new management that came in has been able to turn around the business. However, this does not mean that BS is bad – but perhaps my experience hasn’t been very positive
Afaik, they have had held multiple pharma businesses across the entire value chain globally. Even in pharma, there have been cases where BS bought a business and sold it within a few years.
If BS were to buy Cipla, I would hypothesize that at some point BS might exit. However, this news has come out when Cipla is at its peak so I am presently uncertain if my hypothesis is applicable here (or) how should I evaluate this news. Maybe, I am incapable to evaluate this news – certainly I need more time
I am putting an example for you (you might find multiple such examples)
While some of their pharma businesses have been quite big in size, it’s difficult to comment on their success rate (they have a large no of investments making it difficult to see what %age of their pharma biz turn out to be successful).
Further, “success” is a subjective term (when you say “…did they likely succeed”, I do not know what you do call a success? 10% return in a year? 100% return in a month? 30% CAGR over 3 years? 12% CAGR over a decade?).
While an investment may work or not, over the longer horizon BS usually has made shareholders satisfied. If I were to invest based solely on this news and my past experience, I would prefer to invest in the holding company and not in the company being purchased.
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