Key Takeaways
- Sun Pharmaceutical Industries plans to raise 100 billion rupees ($1.04 billion) via a debt sale.
- The funds will partly finance a bridge loan for the acquisition of US healthcare firm Organon & Co.
- Indian companies are exploring domestic funding due to higher US yields making dollar funding costlier.
India’s Sun Pharmaceutical Industries is planning to raise approximately 100 billion rupees ($1.04 billion) through a rupee-denominated debt sale, according to three anonymous sources. This move is aimed at partly funding a bridge loan taken to acquire US healthcare firm Organon & Co.
Sun Pharma, the country’s largest drugmaker by market capitalization, recently completed a syndication of a near-$12 billion, 18-month bridge loan for the Organon acquisition. The syndication included State Bank of India, the country’s largest lender by assets.
Bankers expect total domestic corporate debt issuances in India to reach a record this year, as higher US yields have made dollar funding more expensive, prompting companies to explore domestic funding options.
Sun Pharma intends to sell shorter-duration bonds with maturities of two, three, and four years. The move comes as Indian companies are trying to lock in borrowing costs ahead of a potential rate hike by the Reserve Bank of India.
Sources also noted that about $3 billion worth of rupee debt issuances are expected over the next few days, indicating a growing trend among Indian firms to tap into the domestic market for funding.
The acquisition of Organon & Co. by Sun Pharma is part of a broader strategy to expand the company’s global footprint and strengthen its position in the healthcare sector.
Sun Pharma’s recent financial performance has been robust, with the company beating profit expectations due to strong domestic demand. This has further fueled its ambitions for expansion through strategic acquisitions.
The bridge loan taken by Sun Pharma for the Organon acquisition is a common practice in the industry, allowing companies to secure immediate financing for large deals before securing more permanent funding.
