Rakesh Jhunjhunwala's Rare Equity in talks to prepay Rs 500 crore Barclays debt

Rakesh Jhunjhunwala

Rare Equity, a stock trading firm built by the late veteran stock market investor Rakesh Jhunjhunwala, has approached Barclays to prepay Rs 500 crore debt as the company restructures itself after the demise of the Indian billionaire, The Economic Times reported on October 10, citing sources familiar with the development.

The debt, borrowed last year from one of the arms of the British banking group, went towards part-funding Jhunjhunwala's acquisition of stake in Zydus Cadila's animal healthcare business, the report said.

Moneycontrol could not independently verify the report.

The money was raised by Rare Equity by placing zero-coupon bonds with a Barclays entity. The fundraising was backed by a pledge of shares and personal guarantee of Rakesh Jhunjhunwala and his wife Rekha.

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"It was an unusual offering," a bond trader told ET. "Before that, I don't recall Jhunjhunwala having ever borrowed from the bond market. Rare Enterprises or other firms he controlled had very little debt," he added.

A prepayment, in the absence of a put or call option in a debt security, attracts charges. "Understandably, officials of Rare Enterprises would negotiate to lower any prepayment charge. This could well be part of an overall decision to pay off whatever debt they have and focus only on long-term investments," another market person told ET.