Torrent Pharma likely to raise ₹1,500 cr
Torrent Pharma Ltd is likely to raise at least ₹1,500 crore by selling shares to institutional investors, as it prepares a bid for the generic drugs unit of France’s Sanofi, two people aware of the development said.
Torrent Pharma is readying a €2 billion (₹16,000 crore) binding bid for Sanofi’s unit Zentiva NV, Mint reported on March 7. It has tied up funding from several banks for the bid, the deadline for which ends on March 28, the report added.
“Torrent has appointed JP Morgan and JM Financial to help it raise ₹1,500 to support its acquisition efforts. The firm has already had a couple of rounds of meetings with probable investors for the purpose of the fundraising,” one of the people cited above said, requesting anonymity, as he is not authorized to speak to reporters.
The proposed fundraising will help the pharma company strengthen its balance sheet as it looks to absorb yet another major asset, he added.
On March 1, Torrent told exchanges that its shareholders had approved raising as much as ₹5,000 crore of equity capital through a qualified institutional placement (QIP) and other routes.
According to the second person cited above, Torrent has a strong track record of growing through acquisitions and therefore it should not see much difficulty in convincing investors to participate in its QIP. He too requested anonymity. In January, the company announced the acquisition of US-based generic pharmaceuticals company, Biopharm Inc (BPI). BPI is a maker of oral solutions, suspensions and suppositories.
In November last year, it acquired the domestic business of Unichem Laboratories for close to ₹3,600 crore. In 2014, Torrent acquired the branded domestic formulations business of Elder Pharma for ₹2,000 crore and acquired select brands of Novartis, and manufacturing plants of Zyg Pharma and Glochem Industries in 2015.
According to analysts, Torrent has a track record of turning around acquired assets and controlling its debt post acquisition and that should comfort investors. “Post the Unichem acquisition, net debt increased to ₹4,000 crore (as against ₹2,350 crore in September 2017).
Torrent Pharma’s track record of successful turnaround of the acquired Elder business and debt reduction post the acquisition in FY14, provides comfort,” Spark Capital said in a research note last month.
Emails sent on Friday to Torrent Pharma and JM Financial did not elicit any response. JP Morgan declined to comment. Torrent’s acquisition of Zentiva, if it happens, will be the biggest outbound transaction by an Indian drug maker. As on date, the record for the largest outbound acquisition stands in the name of Lupin Ltd, which in 2015 acquired Gavis Pharmaceuticals Llc. and Novel Laboratories Inc. for $880 million.
Sanofi had acquired Zentiva in 2009 for close to $2.6 billion. It is currently the third-largest generics company in Europe and sells medicines for cardiovascular, gastrointestinal, anti-inflammatory, pain management, metabolic and blood disorders, among others.
MUMBAI: THE FUNDRAISING
WILL HELP THE FIRM STRENGTHEN ITS BALANCE SHEET AS IT LOOKS TO ABSORB YET ANOTHER MAJOR ASSET