Mankind Pharma (MPL) is acquiring 100% of Bharat Serums (BSV) from the private equity major, Advent.
- BSV has a niche portfolio offering in Women’s Health, encompassing the entire lifecycle – from fertility to post-pregnancy.
- Deal is agreed at an Enterprise Valuation (EV) of Rs 13,630 cr translating to 28x of FY24 EBITDA.
- For comparison MPL’s EV/ EBITDA for FY24 is currently around 32x
- Source of funding is mentioned to be internal accruals, debt as well as equity
- As at March 2024 end, MPL had net cash position of Rs 3,260 cr
- Annually on current operations, it generates operating cash of abt Rs 2,000 cr. BSV will potentially add another Rs 500 cr to this
- Clearly MPL will have to arrange for significant funding for this acquisition that will leverage the BS and also dilute the existing shareholders
- Pre and post acquisition pro forma numbers for MPL
- Rationale for acquisition by MPL
- High entry barrier business
- Big opportunity in fertility drug market
- Proven track record of BSV’s growth both in India and internationally
- BSV’s manufacturing and R&D set-up
- Revenue and cost synergies
- EPS accretive
It’s a significant acquisition for MPL that will deteriorate the capital structure in the short to medium term. Operationally the acquisition does look strong albeit at steep valuations.
MPL is speculated to raise more than Rs 9,000 crore through a mix of non-convertible debentures (NCDs) and short-term commercial paper to finance the deal.
Borrowing tenure is likely to be 1-5 years and blended cost 8.5%.
Apart from this, the company plans to raise Rs 2,000-3,000 crore through an equity issue this fiscal.
https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/mankind-pharma-eyes-9000-cr-via-debt-to-stitch-bsv-deal/articleshow/113003182.cms?from=mdr
Board has approved raising Rs 5000 cr through NCD in 3-4 distinct series with maturities of upto 48 months and Rs 5,000 cr through the Commercial papers in multiple tranches of tenure between 3 to 12 months.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/eb8e4714-3738-4bee-a996-b40e698794f1.pdf