Mankind Pharma plans Rs 9,000 crore raise for Bharat Serums acquisition

The move will position Mankind as a leader in the gynaecology-fertility segment, with an anticipated market share of around 20%, surpassing Emcure

Mankind Pharma Ltd, India's fourth-largest pharmaceutical company by market share, is set to raise over Rs 9,000 crore through a strategic mix of non-convertible debentures (NCDs) and short-term commercial paper. This significant fundraising initiative aims to support its Rs 13,630 crore acquisition of Bharat Serums and Vaccines Ltd (BSV), a transaction announced in late July, as reported by The Economic Times.

The average blended cost of this debt is projected to be around 8.5 per cent, with borrowing terms spanning one to five years. Major mutual funds have also been approached to secure the placement of this debt, with potential terms extending up to five years depending on investor demand, sources said.

 

“The majority of the funds will come from mutual funds, with insurance companies also expected to invest, especially in the longer-term debt offerings,” a source was quoted saying by The Economic Times.

The debt arrangement is being underwritten jointly by Deutsche Bank and Barclays Plc, with final pricing anticipated in the near future.

A Mankind Pharma spokesperson confirmed that the bond issuance will be completed within the coming weeks. The company also plans to raise Rs 2,000-3,000 crore through an equity issue within the current financial year.

In May, Mankind’s board approved a Rs 7,500 crore equity fundraising plan and increased its borrowing limit to Rs 12,500 crore.

This acquisition of BSV from private equity firm Advent International is Mankind Pharma’s largest purchase since its market debut a year ago. Upon completion, this deal will establish Mankind as a leader in the rapidly growing gynaecology-fertility segment, with an expected market share of around 20 per cent, surpassing Emcure. Mankind’s market share in this sector stood at 8.19 per cent in FY24. The acquisition will be funded through a combination of internal accruals, debt, and equity.

Despite the substantial debt, Mankind plans to return to the equity markets next fiscal year to raise additional funds for debt repayment, contingent on market conditions. The company aims to finalise the acquisition within the next three to four months.

As of FY24, Mankind had a total debt of Rs 9 crore and a net cash position of Rs 3,747 crore as of June. The company’s market capitalisation is currently Rs 95,846 crore, with its stock appreciating by 34 per cent over the past year, outpacing the 31 per cent increase in the benchmark Nifty index.

Before the acquisition announcement, credit rating agency Crisil assigned an AA+/stable rating to Mankind’s NCDs, reflecting the company’s robust market position, operational efficiency, and favourable financial risk profile. Crisil expects Mankind’s business risk profile to remain stable, supported by its diversified therapeutic presence and strong domestic market position. The company is anticipated to maintain operating profitability in the range of 25-26 per cent.

Rajeev Juneja, managing director of Mankind Pharma, recently stated that the company aims to repay the debt incurred from the BSV acquisition within three years.