Torrent Pharma eyes Rs 12,500-crore bond sale next week. Check details

Torrent Pharmaceuticals is preparing a large debt-market sale of around ₹12,500 crore next week to fund its proposed acquisition of JB Chemicals & Pharmaceuticals, multiple people aware of the fundraising told ET. The large issue of commercial paper and non-convertible debentures shows the expanding role of debt capital market in financing acquisitions.

The Ahmedabad-headquartered drugmaker is using instruments with maturities ranging from one to five years, the people said. The notes are expected to be priced between 7.15% and 7.5%.

Barclays, Standard Chartered and HSBC are arranging the transaction, which would rank among the largest sponsor-backed financings in the country's pharmaceutical sector this year. The fundraising comes as the Reserve Bank of India (RBI) has issued draft rules that would allow banks to finance corporate acquisitions, an activity that was largely restricted under earlier regulations. As a result, private credit funds, mutual funds, alternative investment funds and non-bank lenders hitherto dominated acquisition financing in recent years.

Global banks and domestic investors have backed deals such as Mankind Pharma's purchase of Bharat Serums and Vaccines and Nirma's acquisition of Glenmark Life Sciences, but the new framework is expected to allow banks to fund acquisitions. Torrent's bonds are expected to be rated AA+ . The company plans to service the bonds through internal cash generation, the people said.