Persistent Systems plans rupee bond sale to refinance Nagarro acquisition debt
Persistent Systems is preparing its first rupee-denominated bond issue as the Indian software company reshapes funding for its takeover of Germany-based Nagarro. The planned fundraising could reach 80 billion rupees and is structured across maturities from one year to five years, pointing to a broad domestic debt market push later this month.
Highlights
- Persistent Systems plans to raise up to 80 billion rupees ($842 million) via multi-tranche rupee bonds with 1-5 year maturities, likely launching in October.
- The bond proceeds will refinance a bridge loan taken for Persistent Systems' acquisition of a 94% stake in Nagarro, with plans to buy out minorities and delist the company.
- Icra rated the proposed bonds AA-plus, noting Persistent Systems will fund the $1.25 billion Nagarro acquisition with up to $450 million equity and the rest through debt.
Bond structure and acquisition funding plan
As first reported by Reuters, Persistent Systems is set to raise up to 80 billion rupees, or about $842 million, through a multi-tranche bond sale, according to two merchant bankers with direct knowledge of the matter. The company is expected to issue rupee bonds with maturities of one, two, three, four and five years, and the deal is likely to be launched later in October.The bankers said the proceeds are intended to refinance a bridge loan that Persistent Systems took earlier this year to support its acquisition of Nagarro. The sources spoke on condition of anonymity because they are not authorised to speak publicly, while the company did not respond to an email seeking comment.
Credit profile and broader financing mix
Icra has assigned an AA-plus rating to the proposed bonds, providing a credit benchmark for the planned debt sale. Persistent Systems has acquired a 94% stake in Nagarro and plans to buy out minority shareholders before delisting the Germany-based technology services company.The total funding needed to acquire 100% of Nagarro is about $1.25 billion. While Persistent Systems had previously proposed to fund the transaction entirely through debt, Icra said in its ratings note that the company has more recently announced plans to raise up to $450 million in equity and fund the remaining amount through debt.
Our earlier coverage of Hainan Rubber’s planned subordinated perpetual sustainable securities explained how the company aimed to refinance offshore debt through notes issued via its Halcyon Agri unit and guaranteed on a subordinated basis. We highlighted why the instruments were rated below the issuer level, focusing on their lower ranking in the capital structure and the option to defer coupons, alongside key takeaways on leverage and liquidity supporting the credit view.
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