The average blended cost of the debt is likely to be around 8.50% with the firm seeking to borrow money over one- to-five years, said three people familiar with the plans. “Bankers have already approached large mutual funds to place the debt, which will range from one year and may go up to five years looking at the demand,” said one of the persons cited above.
“Most of the money will be raised from mutual funds while some insurance companies could also look to invest, especially at the longer end of the tenure,” the person said.
The debt to be raised for the deal has been jointly underwritten by Deutsche Bank and Barclays Plc and is likely to be priced in the next few days, these people said. A Barclays spokesperson declined to comment. Deutsche Bank didn’t respond to queries.
A Mankind Pharma spokesperson confirmed that the fund raising through bonds will be finalised within a few weeks. Apart from this, “the company plans to raise Rs 2,000-3,000 crore through an equity issue this fiscal,” the spokesperson said.
In May, Mankind’s board approved an equity fundraising of Rs 7,500 crore, and also increased the borrowing limit to Rs 12,500 crore. Mankind is acquiring BSV from private equity firm Advent International. This will be the largest acquisition by the company that got listed a year ago and will make Mankind market leader in the fast-growing gynaecology-fertility or women’s health segment with around 20% market share, edging past Emcure. Mankind’s market share in the segment in FY24 was 8.19%. The company had said the acquisition will be funded through internal accruals and a mix of debt and equity while announcing the deal.”Though the company is borrowing such a huge amount from debt, the plan is to tap the equity markets again sometime later next fiscal and raise funds which will be used to repay some of the debt. That plan is of course dependent on market conditions,” said a second person aware of the details. In July, the company had said it expects to complete the acquisition in the next three to four months.
MCap of Rs 95,846 cr
The company had total debt of Rs 9 crore at the end of FY24 with a net cash position of Rs 3,747 crore at the end of June. Its current market capitalisation is Rs 95,846 crore, with the stock having gained 34% in the past year compared with a 31% rise in the benchmark Nifty.
Before the acquisition was announced in July, credit rating agency Crisil had assigned an AA+/stable rating to the company’s NCDs, citing its established position in the domestic formulations market, strong operational efficiency, network and comfortable financial risk profile.
“The business risk profile of Mankind will remain stable over the medium term supported by its diversified presence across therapies and established position in the domestic market through strong brands,” Crisil had said. “The company is also expected to sustain operating profitability in the range of 25-26% on a steady state basis.”
In a recent interview to ET, Rajeev Juneja, managing director of Mankind Pharma, said the company intends to clear debt taken for BSV acquisition in less than three years.
