Barclays has bankrolled Rakesh Jhunjhunwala’s recent acquisition of stake in Zydus Cadila’s animal healthcare business.

An arm of the British banking group is learnt to have bought out the entire Rs 500-crore zero-coupon bond offering by Rare Equity Private Ltd (REPL), a Jhunjhunwala controlled company, in what was a rare borrowing by the ace investor in the bond market.

The fund-raising is backed by pledge of shares and private assure of Jhunjhunwala and his spouse Rekha Jhunjhunwala.

REPL issued non-convertible debentures (NCD) in two tranches, with maturities of three years and at some point, and 4 years and at some point, producing a yield of round 7.75% for Barclays. “It’s a very good rate for the borrower.. it’s kind of name lending,” stated a bond market supply.

According to the settlement, the shares pledged are out of a preapproved record of shares offered by the lender or are scrips within the BSE100 basket, which type 80% of the whole pledge. Stocks exterior BSE100 are capped at 20%. The pledge is designed in such a manner that there needs to be at the least 5 shares, with the contribution of a single inventory and any sector capped at 30% and 50% of the whole pledge basket, respectively. Also, the phrases lay down that pledged shares from any single promoter holding group, besides the Tata group, wouldn’t exceed 40%. For Tata group firm shares, a better cap of 55% would apply. ET’s e-mail to Jhunjhunwala went unanswered until the time of going to press. A Barclays Bank India spokesperson stated the financial institution wouldn’t touch upon the matter. The MNC financial institution entity is learnt to have made the funding by way of Reserve

’s ‘voluntary retention route’ (VRR).

RBI launched it in March 2019 to draw long-term investments by overseas portfolio traders (FPIs) within the debt market.

Investment by the VRR window is allowed over and above the final funding limits for FPIs, so long as the offshore institutional investor guarantees to carry on to 75% or extra of the allotted funding for at the least three years. RBI had additionally laid down 75% of this ‘committed amount’ have to be invested inside three months from the date of allotment of funding limits. In view of difficulties expressed by FPIs and their custodians on account of Covid-19 associated disruptions in adhering to this situation, RBI in May 2020 allowed a further three months to FPIs to fulfill the norm.

Based on the pledge, assure and completion of sure documentation, credit standing company Acuité has given ‘double-A plus’ ranking and ‘stable’ outlook to the NCDs issued by REPL. The ranking considers help of resourceful promoters of REPL i.e. Rakesh Jhunjhunwala and Rekha Jhunjhunwala. The ranking additional derives consolation from the energy of the construction which has laid out stringent circumstances on identification of securities to be pledged, the occasions cowl to be maintained and covenants governing inventory/sector focus, top-up eventualities and circumstances, fee mechanism, apart from mandating non-disposal endeavor (NDU) on issuers partial possession in shares of buying firm.