Key Highlights

• Jubilant Bhartia Group plans ₹5,650 crore NCD issuance to finance 40% stake in Hindustan Coca-Cola Holdings.
• Subsidiaries Jubilant Beverages and Jubilant Bevco to raise funds through zero-coupon bonds for acquisition.

In order to finance its ₹12,650 crore acquisition of a 40% stake in Hindustan Coca-Cola Holdings Pvt Ltd (HCCH), Coca-Cola's largest bottling partner in India, the Jubilant Bhartia Group intends to issue non-convertible debentures (NCDs) issued by two group companies, raising over ₹5,650 crore, according to reports.

Jubilant Beverages Ltd, a division of the Jubilant Bhartia Group, plans to issue ₹2,650 crore in fully paid-up, unsecured, rupee-denominated, listed-rated, redeemable NCDs. Anchor investors will contribute ₹795 crore to the offering, while a larger market tranche will contribute ₹1,855 crore.

Through the issuance of bonds, Jubilant Bevco Ltd hopes to raise ₹3,000 crore, of which ₹900 crore will come from anchor subscriptions and ₹2,100 crore from other investors.

Also Read: PepsiCo India Reports Rs 1,172 Cr PBT, Rs 8,877 Cr Revenue for CY2024

Zero-coupon structure and step-up clause

Both NCD issuances are structured as zero-coupon instruments with terms of two years, 11 months, and 27 days. They provide annualized implied yields of 9% for Jubilant Beverages and 9.15% for Jubilant Bevco. The bonds include a step-up clause, which states that if the credit rating is downgraded, the internal rate of return will increase by 25 basis points. Rather than receiving periodic coupon payments, investors will receive a redemption premium when they reach maturity. The public issuance for both NCDs will begin on June 4. 

Financing the HCCH acquisition

The proceeds from the NCDs will help to fund the group's acquisition of HCCH, which was announced in December 2024 and received Competition Commission of India approval on May 1 of this year. According to the deal structure, Jubilant Beverages Ltd will acquire equity shares from Coca-Cola entities, while Jubilant Bevco and an investor consortium will subscribe to compulsorily convertible preference shares (CCPS) in Jubilant Beverages Ltd.

The funding package includes ₹5,650 crore in debt from NCDs, CCPS from private capital providers, and equity infusion from Jubilant Bhartia's holding company, JBCL. The deal values Hindustan Coca-Cola Beverages at ₹31,250 crore.