 "Mankind Pharma’s Bold Move: Financing Rs 13,630 Crore Acquisition Amidst Debt")
Mankind Pharma, India’s fourth-largest pharmaceutical company, plans to raise over Rs 9,000 crore through non-convertible debentures and short-term commercial paper to fund its Rs 13,630 crore acquisition of Bharat Serums and Vaccines Ltd. The company expects an average borrowing cost of about 8.5 percent. This acquisition will significantly enhance Mankind’s position in the gynaecology-fertility Market, increasing its Market share to approximately 20 percent. Although taking on substantial debt, Mankind intends to return to the equity Market for further fundraising next year. With a solid financial profile, the company aims to repay the acquisition debt within three years, ensuring stable growth in its diversified operations.
Mankind Pharma Ltd, one of India’s leading pharmaceutical companies, is making headlines with its ambitious plan to raise over Rs 9,000 crore through non-convertible debentures (NCDs) and short-term commercial paper. This fundraising effort is aimed at supporting Mankind’s significant acquisition of Bharat Serums and Vaccines Ltd (BSV), which is valued at Rs 13,630 crore. The announcement of this acquisition came in late July and, if completed successfully, will position Mankind as a dominant player in the growing gynaecology and fertility Market.
The fundraising strategy is expected to carry an average cost of around 8.5 percent, with loan durations varying from one to five years. Mankind Pharma is focusing on mutual funds as a primary source of these funds, with insurance firms also likely to participate, particularly in the longer-term offerings. The underwriting of this debt involves major financial institutions like Deutsche Bank and Barclays Plc, with final pricing details expected soon.
A spokesperson from Mankind confirmed that the bond issuance process is set to be completed within the upcoming weeks. In addition, the company plans to raise between Rs 2,000-3,000 crore through an equity issue during the current financial year. Earlier this year, Mankind’s board had already approved a Rs 7,500 crore equity fundraising plan and increased its borrowing limit, reflecting its proactive approach toward financing growth.
This strategic move to acquire BSV marks Mankind Pharma’s largest acquisition since its debut in the Market a year ago and is anticipated to enhance its Market share in the gynaecology-fertility sector from the current 8.19 percent to around 20 percent. Despite taking on substantial debt, Mankind plans to return to the equity markets in the next fiscal year for additional funding, contingent upon prevailing Market conditions.
With a strong debt management plan in place, Mankind aims to repay the acquisition-related debt within three years. As of June 2024, company reports reveal Mankind holds a total debt of Rs 9 crore alongside a net cash position of Rs 3,747 crore. Their Market capitalisation has currently reached Rs 95,846 crore, reflecting a significant stock appreciation of 34 percent over the past year, outpacing the overall Market growth.
Crisil, a credit rating agency, has assigned an AA+/stable rating to Mankind’s NCDs, highlighting the company’s solid Market standing and operational efficiency. The future looks promising for Mankind Pharma as it ventures into new territories while maintaining a stable business risk profile.
Tags: Mankind Pharma, Bharat Serums and Vaccines, NCDs, pharmaceutical industry, gynaecology Market, equity fundraising, investment, financial news, India’s pharma sector.
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What is Mankind Pharma planning to do with the Rs 9,000 crore?
Mankind Pharma wants to raise Rs 9,000 crore to buy Bharat Serums, a company that makes medicines. -
Why does Mankind Pharma want to acquire Bharat Serums?
They believe acquiring Bharat Serums will help them grow their business and expand their range of products. -
How does this acquisition affect customers?
The acquisition may lead to more medicine options and possibly better prices or services for customers. -
When will Mankind Pharma raise this money?
They are planning to raise the money in the near future, but the exact date has not been mentioned yet. - Is this a common practice in the pharmaceutical industry?
Yes, it is normal for companies in the pharmaceutical industry to buy other companies to strengthen their Market position.
