India's Torrent Pharmaceuticals plans to secure a loan of up to $1 billion to help fund a planned bid for Cipla, and is in preliminary talks with Apollo Global Management. The company is hoping to secure roughly $3 billion to $4 billion in financing for the bid.
Analysts have estimated that a deal for about 60% of India's No. 3 drugmaker could be worth as much as $7 billion - potentially India's largest pharma deal to date.
Torrent has also said to be in talks with CVC Capital Partners and Bain Capital who may turn out as equity partners in a consortium. Their combined contribution will likely be $1.5 billion to the deal.
Cipla's founding family wants to sell their 33.4% holding, and a bid for such amount will trigger an open offer for another 26% as per Indian regulations, sources told Reuters.
Apollo is considering to buy a small part of the Cipla founding family's stake but the decision will eventually depend on the progression of its talk with Torrent, said one source requesting anonymity.
Apollo is "quite bullish on their Asia strategy, and India in particular...both Cipla and Torrent have strong balance sheets," the person said.
As of March 2023, Apollo managed $438 billion in credit and $101 billion in private equity. It opened up an office in Mumbai last year and has recently issued loans of around $2.5 billion to several entities including Mumbai International Airport and JSW Cement.
Foreign banks such as Morgan Stanley and Barclays are also said to be in talks with Torrent to extend loans and arrange financing for the deal.
Cipla, with a market cap of some $12 billion, is known for making the anti-allergy drug Cetirizine and generic versions of respiratory drugs Advair and Albuterol. It competes with global majors Pfizer and Abbott, among others.
Torrent, whose market cap is 56% lower than Cipla's, sells medicines related to diabetes, pain management and oncology and is present in more than 40 countries.