Mankind Pharma To Raise Rs 7,000-Crore Debt For Bharat Serums Acquisition

Mankind Pharma will raise Rs 7,000 crore debt to fund its acquisition of Bharat Serums and Vaccines Ltd., said the company’s Vice Chairman and Managing Director Rajeev Juneja.

In July this year, the New Delhi-headquartered pharma major had announced plans to acquire 100% stake in Bharat Serums and Vaccines from private equity firm Advent International for Rs 13,630 crore.

Breaking the numbers up for the deal, Juneja told NDTV Profit, “Out of this approximately Rs 14,000 crore deal, Rs 4,000 crore will be coming from the company side. Of the remaining Rs 10,000 crore, Rs 3,000 crore will be coming from the QIP (qualified institutional placement) and the rest will be funded through debt.”

“This will be approximately in the tune of an Ebitda-to debt ratio of two times,” he added.

On Sept. 20, the company said it would raise funds of up to Rs 10,000 crore by way of issuance of non-convertible debentures and commercial papers on a private placement basis.

The debt that Mankind Pharma will take will be used to bridge the time gap between the acquisition and the pre-approved QIP.

In its fourth quarter results for the fiscal 2023–24, Mankind Pharma said that its board of directors had approved a fundraising of Rs 7,500 crore via a QIP.

Juneja added that Mankind Pharma has always been averse to taking debts.

“This is the first time we are taking debt. We are equally concerned that the debt should go away from the books of the company,” he said.

To clear the debts soon, the company has taken some non-core businesses like Western Hotels off its book and put them on the block, Juneja said.

The top executive noted that Bharat Serums and Vaccines has a better growth rate in the 15–20% range versus the 12% growth of Mankind Pharma.

“Our Ebitda is in the range of 25–26%, while their Ebitda is in the range of 28–30% and going forward it will always increase,” he said.

All this will contribute to the overall growth of Mankind Pharma, Juneja highlighted.

“Many of their products are in a monopoly kind of a state. If other competitors may be coming, the price does not go down. Their profit remains good—that’s the plus side of this business,” he pointed out.

Mankind Pharma is not looking to make any other investment as of now, Juneja added.