Torrent Pharma plans to sell bonds worth Rs 14,000 crore for JB Chemicals acquisition

Mumbai: Torrent Pharmaceuticals is preparing a ₹14,000 crore bond sale to fund its bid for JB Chemicals & Pharmaceuticals, people familiar with the matter told ET. This is one of the largest sponsor-funded financings in the Indian pharmaceutical sector this year.

Ahmedabad-based Torrent is in talks with HSBC, Standard Chartered Bank and Barclays for the financing package. The company plans to issue non-convertible debentures (NCDs) in the coming weeks and repayment is expected to begin from March 2027, with an average maturity of up to three years.

The bonds will be managed through internal accruals.
“Bankers are reaching out to investors and it could be funded soon,” said a debt capital market executive.

The NCDs will be priced at around 7.5%, the executive quoted above added. The bonds have an AA+ rating. Such corporate bonds are priced at a spread of 150-175 basis points over the corresponding g-sec.

The proposed merger awaits approval from the Competition Commission of India (CCI), soon followed by the National Company Law Tribunal (NCLT) and other regulators. Torrent’s takeover plan includes the purchase of 46.39% of JB Chemicals shares held by KKR, along with 2.41% of employees. A share purchase agreement has already been signed for the latter, which is part of the 2.8% stake of certain employees. The total acquisition value is estimated at ₹12,532 crore, largely financed through debt. The transaction will also trigger a mandatory open offer to acquire up to 26% of the equity of JB Chemicals from public shareholders at ₹1,639.18 per share, amounting to approximately ₹6,843 crore.

Following the acquisition, Torrent plans to merge JB Chemicals with Torrent Pharmaceuticals (TPL) through an arrangement under which JB shareholders would receive 51 fully paid shares of TPL for every 100 shares in JB.

“Although the transaction is expected to be largely debt-financed, the amount of debt Torrent will incur will depend on the level of subscription to the open offer,” Icra said in a recent report. Torrent Pharma will raise funds through a qualified institutional placement (QIP) if necessary.

Emails sent to Torrent, HSBC, Standard Chartered and Barclays seeking comment elicited no response.

While global banks, mutual funds, AIFs and NBFCs have so far supported debt financing for transactions such as Mankind Pharma’s acquisition of Bharat Serums and Vaccines and Nirma’s acquisition of Glenmark Life Sciences, the Reserve Bank of India recently issued draft guidelines to enable banks to finance corporate acquisitions. Until now, such activities were largely prohibited for banks under the existing RBI rules, leaving private credit funds and mutual funds to dominate the space, which will soon change.