Torrent Pharma Now in talks with Apollo Global Management to borrow up to $1 Billion for Cipla bid

Reportedly, the American Equity firm, Apollo is considering purchasing a small part of the Cipla founding family's stake. However, a final decision is yet to come which depends on the progress of the discussions with Torrent.

Ahmedabad-based Torrent Pharmaceuticals has recently entered into preliminary discussions with Apollo Global Management to obtain a loan of up to $1 billion to acquire rival company Cipla.

An Indian Express report revealed that Torrent is hoping to secure roughly $3 billion to $4 billion in financing for the bid to acquire Cipla.

According to Bernstein analysts estimates, the deal for approximately 60% of India's third-largest drugmaker could be valued at up to $7 billion, potentially making it India's largest pharmaceutical deal to date.

Reportedly, the American Equity firm, Apollo is considering purchasing a small part of the Cipla founding family's stake. However, a final decision is yet to come which depends on the progress of the discussions with Torrent.

'œApollo is quite bullish on their Asia strategy, and India in particular both Cipla and Torrent have strong balance sheets." revealed a source to Indian Express.

Going forward, it remains to be seen whether Apollo will agree to provide the loan and, if so, the amount it will extend.

Earlier on Monday, we reported that the Ahmedabad-based pharmaceutical company was in advanced negotiations with Luxembourg's CVC Capital Partners to raise investment estimated around $1.2-1.5 billion for the acquisition of Cipla.

Torrent has also engaged in discussion with Bain Capital, who may join as equity partners in a consortium, potentially contributing a combined total of $1.5 billion to the deal, as indicated by sources to the publication.

Additionally, Foreign banks, including Morgan Stanley and Barclays, are also in talks with Torrent to extend loans and arrange financing for the deal..

Moreover, Cipla's founding family is eager to divest their 33.4% stake, which would, in turn, trigger an open offer for an additional 26%, in accordance with the Indian regulations.

Adding competition to the narrative, Blackstone, a global investment firm, has also signalled its intent to participate in the bidding for Cipla.

Cipla, with a market capitalisation of approximately $12 billion, faces competition from global giants including Pfizer and Abbott among others, in India where the pharmaceutical market is expected to be worth $130 billion by 2030 from $50 billion currently.

On the other hand, Torrent, with a market capitalisation 56% lower than Cipla's, specialises in medications related to diabetes, pain management, and oncology. It has a presence in over 40 countries.

Founded in 1990, Apollo, counted among the world's largest asset managers, oversaw $438 billion in credit and $101 billion in private equity as of March 2023.

The firm expanded its operations with the opening of an office in Mumbai last year and has recently provided loans of around $2.5 billion to various entities, including Mumbai International Airport and JSW Cement.