Mankind Pharma Ltd, the fourth-largest pharmaceutical company in India, is gearing up to raise over ₹9,000 crore through a combination of non-convertible debentures (NCDs) and short-term commercial paper. This move is part of the company’s strategy to support its ₹13,630 crore acquisition of Bharat Serums and Vaccines Ltd (BSV), a deal first announced in late July.

The company anticipates an average blended cost of debt around 8.5%, with borrowing terms ranging from one to five years. Major mutual funds and insurance companies are expected to play a significant role in this debt placement, with terms likely extending up to five years based on investor demand. Deutsche Bank and Barclays Plc are underwriting the debt arrangement, with final pricing expected soon.

A Mankind Pharma spokesperson confirmed that the bond issuance will be completed within the coming weeks. Additionally, the company plans to raise ₹2,000-3,000 crore through an equity issue within the current financial year. Earlier in May, Mankind’s board had approved a ₹7,500 crore equity fundraising plan and increased its borrowing limit to ₹12,500 crore.

The acquisition of BSV, from private equity firm Advent International, represents Mankind Pharma’s largest purchase since its market debut a year ago. Once completed, the deal is expected to position Mankind as a leader in the gynaecology-fertility segment, aiming for a market share of around 20%, surpassing current leader Emcure. Mankind’s market share in this sector was 8.19% in FY24.

The acquisition will be funded through a mix of internal accruals, debt, and equity. Despite the significant debt, Mankind plans to return to the equity markets in the next fiscal year to raise additional funds for debt repayment, contingent on market conditions. The deal is expected to finalize within the next three to four months.

As of FY24, Mankind Pharma had total debt of ₹9 crore and a net cash position of ₹3,747 crore as of June. The company’s market capitalization stands at ₹95,846 crore, with its stock rising by 34% over the past year, surpassing the 31% increase in the Nifty index.

Credit rating agency Crisil has assigned an AA+/stable rating to Mankind’s NCDs, reflecting the company’s strong market position, operational efficiency, and favorable 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 projected to maintain operating profitability in the range of 25-26%. Rajeev Juneja, managing director of Mankind Pharma, has stated that the company aims to repay the debt incurred from the BSV acquisition within three years.