Torrent Pharma in Talks for $1.2-1.5 Billion Funding from CVC Capital for Cipla Buyout

18 Sep 2023 , 01:35 PM

Torrent Pharmaceuticals in advanced discussions with CVC Capital Partners to form a consortium for a substantial funding round, aiming for $1.2-1.5 billion. The funding drive is part of a massive acquisition financing plan of Rs 60,000 crore (around $7 billion) for the potential acquisition of pharmaceutical rival Cipla.

The acquisition financing package represents one of the largest in recent times, underscoring the scale and importance of the potential acquisition. Discussions with various private equity funds, including Bain Capital, are ongoing, but CVC Capital Partners appears to be the lead partner for this initiative.

Torrent is exploring financing options, including discussions with Brookfield for mezzanine debt in the range of $1-1.2 billion (approximately Rs 8,300-9,000 crore). Torrent aims to conclude funding discussions by the end of September, aiming to finalize a formal offer for the acquisition.

Multiple international banks like Standard Chartered Bank, Barclays, MUFG, Citi, and Morgan Stanley are involved in arranging a senior debt facility of Rs 30,000-32,000 crore (approximately $3.8 billion) for the acquisition. The funding structure leverages shares as collateral for loans, a non-disposable undertaking (NDU), allowing stock sales, differing from traditional share pledging. Flexibility to increase commitments up to $2.25 billion (Rs 18,675 crore) and $1.5 billion (Rs 12,450 crore) by CVC and Brookfield, respectively, showcases determination to secure funds for the acquisition.

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