Torrent in top gear to close out Cipla buyout, in talks with PEs, banks for funds
Torrent Pharma is cranking up its efforts to put together financing to buy out the promoter family of Cipla, said several people with knowledge of the matter, emerging as a key contender to conclude the largest pharma sector acquisition in the country till date. This includes a likely Rs 8,300 crore ($1 billion) equity infusion from one or more private equity players, they said.
Ahmedabad-based Torrent has reached out to several PE funds, including Advent International, Bain Capital, Warburg Pincus and CVC Capital, for a minority stake in a consortium.
In addition, it is in talks with domestic shadow banks and mutual funds for Rs 9,000-10,000 crore ($1.1 billion) in share-backed promoter financing. Torrent’s founders, the Sudhir and Samir Mehta family, own 71.25% as promoters. That’s amongst the highest promoter ownership in Indian pharma and they are seeking to use that headroom to dilute equity to raise leverage.
They are also in separate discussions with foreign banks — Standard Chartered, JP Morgan, MUFG, Citi and Barclays among others — to raise as much Rs 32,000-35,000 crore (up to $4.23 billion) against the cashflows of the target as acquisition financing. The lenders are expected to revert with funding commitment letters at the earliest, said the sources mentioned above. JP Morgan is also advising Torrent Pharma.
Bain, Advent, Warburg and CVC declined to comment.
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The financing terms are still being worked on and may change in the coming days. The PE discussions too are at an early stage and may get adversely impacted if Cipla’s valuation keeps going up.
Torrent is currently aiming at submitting a binding offer in
