Meet Hari Bhartia, Shyam Bhartia eyeing 40% stake in Coco-Cola bottling, seek Rs 125000000000 in funds to…

The Bhartia brothers, Shyam Bhartia, the promoters of the Jubilant Bhartia Group, are seeking a 40% stake in Hindustan Coca-Cola Beverages (HCCB), and are looking to raise funds up to Rs 12,500 crore from various investors.

Shyam and Hari Bhartia, the promoters of Jubilant Bhartia Group, are eyeing a 40% stake in Hindustan Coca-Cola Beverages (HCCB), and are looking to raise funds up to Rs 12,500 crore from various investors. According to a news reports, the Bhartia brothers are engaged in talks with alternative asset managers, mutual funds, and international banks, to raise the required funds for acquiring a major stake in Coca-Cola’s Indian bottling subsidiary.

The investment, if successful, will be the largest for the Jubilant Bhartia Group’s diversified business interests which range from food to pharmaceuticals, The Economic Times (ET) reported.

As per the report, the Bhartias are engaged in discussions with several firms such as Apollo Global Management, Ares Management, Bain Capital, and Kotak Alternate Asset Managers to secure around Rs 4,000-Rs 5,000 crore. The report said the proposed financial arrangement  likely a compulsorily convertible preference share or a convertible debenture, with tenure of three years and a minimum return guarantee.

Coca-Cola plans to list HCCB

Coca-Cola, which leads India’s soft beverages market, is planning to list HCCB akin to the asset-light model adopted by its rival PepsiCo. This is seen as a critical factor in the deal as the stake sale of HCCB is expected to assist with the price discovery ahead of HCCB’s IPO, which is likely to come in a few years, the report said.

According to the ET report, unlike traditional debt transactions, the terms of this deal may not include a coupon if treated as a quasi-equity instrument. The agreement is also unlikely to involve any security tied to shares of the group’s listed entities, such as Jubilant Foodworks, the report added.

Coca-Cola had picked the Bhartia brothers after they outbid Burman family of Dabur, to collaborate in their bottling operations in India, which has witnessed a rapid expansion over the years. Both parties have signed an exclusivity agreement for bilateral negotiations, the report said.

Additionally, Morgan Stanley is leading efforts to secure a three- to five-year debt tranche from mutual funds for the Bhartias, the report said.