Mumbai : Karsanbhai Patel-promoted Nirma has mandated HSBC, Kotak Investment Advisors and Barclays as lead managers to raise ₹3,500 crore in debt to finance acquisition of Glenmark Life Sciences, said people with knowledge of the matter.

Nirma has proposed to raise the debt in the form of rated, listed, non-convertible debentures (NCD) for a term of one, two and three years, the people said. The interest rate on the bonds will range from 9% to 10%.

Unlisted Nirma signed a definitive arrangement with listed Glenmark Pharmaceuticals in September 2023 to acquire 75% stake Glenmark Life Sciences (GLS) for ₹5,650 crore. Nirma, which recently received approvals from CCI on this acquisition, is expected to complete the deal by the end of this fiscal year.

The bond issuance is likely to take place in February, one of the persons cited above said. “Nirma will fund a part of the acquisition from the proceeds of the proposed bonds, and part of it will be through internal accruals,” the same person said.

HSBC declined to comment. Nirma, Barclays and Kotak did not respond to ET’s request for comments. According to India Ratings dated January 15, the GLS acquisition by FY24 is likely to improve its (Nirma) business profile further, helping diversify its operations and driving revenue growth from FY25.

On a consolidated basis, Nirma had cash and liquid investments of Rs 2,500 crore as of November 2023, said the rating report. It has scheduled debt payments of Rs 2,500 crore during FY25, which it intends to meet through cash flow generation and available liquidity, the rating report said.The rating company, which has assigned an AA rating to the proposed bonds, said that Nirma’s net leverage is likely to be elevated in FY24 on account of the acquisition, and the credit metrics are likely to improve gradually over FY25-FY26 with incremental operating cash flows of GLS. The acquisition will likely strengthen Nirma’s business profile by enhancing diversification with an additional stream of pharmaceutical revenue and increasing scale while reducing the susceptibility of overall cash flows to commodity cycles and improving the margin profile, India Ratings stated.

As per the Securities and Exchange Board of India’s regulations, Nirma will have to make an open offer to acquire equity shares of GLS, representing a 17.33% stake at Rs 631.2 per share.

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