Torrent Pharmaceuticals is set to undertake one of the largest bond sales of the current financial year, with plans to raise up to ₹12,500.00 crores ($1.4 billion) through short-duration bond sales in January. The pharmaceutical company is pursuing this significant fund-raising initiative to finance its acquisition of a controlling stake in JB Chemicals & Pharmaceuticals.

Bond Issue Structure and Timeline

The bond issuance is structured to span maturities ranging from one to five years, providing flexibility in the company's debt profile. According to banking sources, the company is currently finalizing rates and allocation quantum for each maturity bracket. Once these parameters are determined, the issue will be opened for bidding on the electronic platform.

Acquisition Details and Market Impact

Torrent Pharmaceuticals has agreed to acquire a controlling stake in JB Chemicals at an equity valuation of approximately ₹25,700.00 crores on a fully diluted basis. The transaction will be followed by a merger of the two companies, creating a larger pharmaceutical entity in the domestic market.

India Ratings and Research, which assigned an AA+ rating to the bond issue, highlighted that this acquisition will significantly enhance Torrent Pharma's market position. The deal is expected to elevate the company's ranking in the domestic pharmaceutical market from seventh to fifth position by market share.

Broader Market Trend

This bond sale represents the largest rated fund-raising effort in the current financial year, which runs from April to March. The transaction extends a notable trend of acquisitions being financed through domestic bond markets rather than traditional funding sources.

Recent examples of this financing approach include:

• JSW Group: Raised ₹7,000.00 crores via zero-coupon bonds in September to fund the purchase of up to 75% stake in Akzo Nobel's Indian unit
• Jubilant Bhartia Group: Two subsidiaries raised a combined ₹5,650.00 crores through zero-coupon bonds in June to fund a 40% stake acquisition in Hindustan Coca-Cola Holdings

Financial Structure and Market Positioning

The comprehensive funding structure includes both long-term bonds and short-term commercial paper, demonstrating a balanced approach to acquisition financing. The ₹1,500.00 crores commercial paper component will provide additional liquidity support for the transaction.

The AA+ rating reflects the strong credit profile of Torrent Pharmaceuticals and the strategic value of the proposed acquisition. This rating should facilitate competitive pricing for the bond issue when it opens for bidding in January.

Torrent Pharmaceuticals has announced a significant fundraising initiative, with its board approving the raising of up to ₹12,500 crore through the issuance of securities on a private placement basis. The pharmaceutical company disclosed this development through a regulatory filing following a board committee meeting held on Monday.

Fundraising Structure and Approval

The Securities Transfer and Stakeholders Relationship Committee has given its approval for the issuance of secured, rated, listed, redeemable non-convertible debentures. The fundraising details are outlined in the following structure:

Recent Corporate Developments

This fundraising announcement follows Torrent Pharma's major acquisition activity from the previous year. In June last year, the company announced its plan to acquire a majority stake in J B Chemicals and Pharmaceuticals through a substantial ₹19,500-crore deal, demonstrating the company's expansion strategy in the pharmaceutical sector.

Market Performance

The company's stock performance on Monday reflected a slight decline, with shares closing the trading session marginally lower:

The fundraising through non-convertible debentures represents a debt financing approach that allows the company to raise capital while maintaining its current equity structure, as these instruments do not convert into equity shares.