Jubilant promoters to tap MFs, HNIs to raise $700 mn to part finance Coca-Cola bottling biz stake purchase

HCCB is responsible for the manufacturing, packaging, sale, and distribution of beverages under the trademarks of The Coca Cola Company in India

Jubilant Group’s promoter family the Bhartias are looking to raise debt from domestic investors such as mutual funds, family offices and high net-worth individuals (HNI) to raise as much as $700 million (around Rs 6,000 crore) to partly finance its Rs 12,500-crore deal to acquire a 40 percent stake in Coca-Cola’s Indian bottling business, sources have told Moneycontrol.

On December 11, the Jubilant Bhartia Group announced it had entered into a definitive agreement for a strategic investment whereby the pizza-to-pharma conglomerate would acquire a 40 percent equity interest in Hindustan Coca‐Cola Holdings (HCCH) through Jubilant Beverages Ltd.

HCCH is the parent company of Hindustan Coca-Cola Beverages Private Ltd (HCCB), the largest Coca‐Cola bottler in India.

The plans to raise debt from the domestic markets come even as the Jubilant promoters have a committed credit line from Wall Street bank Goldman Sachs for the entire deal size of Rs 12,500 crore (approximately $1.45 billion).

“Goldman has offered to underwrite the entire deal. However, the agreement with Goldman also allows the Jubilant promoters to seek other sources of funding and thus they are exploring the option of raising money from the domestic debt market from mutual funds, HNIs and family offices. They are likely to bring in around Rs 5,000 crore to Rs 6,000 crore through debt and some equity,” said one of the sources cited above.

“Whatever money they manage to raise from the debt markets, will reduce the final loan amount to be drawn down from Goldman.” Raising a significant portion from the domestic debt markets will likely help the Jubilant promoters reduce their overall cost of capital, the person added.

Sources said the Bhartias’ plan to tap the domestic market could see good interest from investors, similar to the demand seen for the debt of Shapoorji Pallonji Group.

In July 2023, Shapoorji Pallonji Group raised Rs 14,300 crore through non-convertible debentures (NCDs) from various investors, who later sold a significant part of the high-yielding debt paper to domestic investors such as HNIs.

Emails and text messages sent to a Jubilant Bhartia Group spokesperson did not elicit a response till the time of publication.

The Jubilant Bhartia Group is a multi‐billion conglomerate with a presence in diverse sectors such as pharmaceuticals, contract research and development services, proprietary novel drugs, life science ingredients, agri products, performance polymers, food service (QSR) and auto.

The group has four listed companies — Jubilant Pharmova, Jubilant Ingrevia, Jubilant FoodWorks and Jubilant Industries.

Hindustan Coca-Cola Beverages

HCCB is responsible for the manufacturing, packaging, sale and distribution of beverages under the trademarks of the Coca-Cola Company in India.

The company has 14 bottling plants in India and covers around 43 percent of the group’s bottling operations in terms of volume in India. Its product portfolio includes both carbonated and non-carbonated soft drinks and packaged drinking water.

According to a report by credit rating firm IndiaRatings, HCCB’s revenue increased about 10 percent year-over-year in FY24 to Rs 13,964 crore on strong growth in the sale of unit cases as prices remained relatively stable.

The EBITDA margin improved to 13.1 percent in FY24 from 12.2 percent in the previous year on positive operating leverage following its increased sales volumes, the rating agency said.

“IndiaRatings expects the revenue to grow in double digits YoY in FY25… driven by an increase in rural demand. The agency expects the operating margins to improve modestly in FY25 from the continued cost-saving initiatives and improved fixed-cost absorption as the revenue increases,” the report said.

As of FY24, HCCB did not have any long-term debt on its balance sheet. Cash flow from operations has remained positive since FY18.