Biocon Biologics aims to raise $950 million through overseas bonds, with the sale managed by Standard Chartered Bank and HSBC, according to sources familiar with the matter.
The money will be used to pay off a large portion of the $1.2 billion debt taken on for buying Viatris Inc.’s biosimilars business.
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Recently, Biocon’s senior management met with investors in Singapore and Hong Kong. They plan to raise between $900 million and $1 billion with a bond term of over five years, though some sources are unsure about the exact timeline.
Biocon Biologics CEO Shreehas Tambe mentioned last month that the company is looking for ways to cut finance costs by adjusting debt repayment schedules and interest rates.
Biocon declined to comment, and Standard Chartered and HSBC did not provide responses.
The company has already repaid $250 million of the $1.2 billion acquisition loan. The bond’s rating, which will affect its pricing, is still pending.
Biocon also has a $335 million payment due to Viatris shareholders in FY25, including $175 million for an option to acquire the biosimilar Aflibercept. However, the company is in a good position to make the remaining $160 million payment.
Biocon has been working to reduce its acquisition-related debt due to high costs. In February 2023, Kotak Special Situation Fund invested ₹1,070 crore in Biocon Ltd for the acquisition, followed by a ₹500 crore investment by Edelweiss in non-convertible debentures. They considered raising ₹4,500 crore through NCDs but have not progressed with this plan.
The company remains focused on cutting debt through various methods, including debt, equity, and hybrid options. Despite manageable debt servicing, high interest costs are impacting profitability, with net profit margins at 7% for FY24.
Biocon holds a 70% stake in Biocon Biologics, while Viatris owns 14%. The acquisition of Viatris’ biosimilars business added $1.2 billion in debt, bringing total obligations to ₹4,800 crore from FY26 onwards.
Biocon Biologics generated 57% of Biocon’s consolidated revenue in FY24, contributing ₹8,824 crore out of the company’s total ₹15,621 crore.
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