Whalesbook
JSW Paints Limited has successfully completed its first issuance of listed, rated, unsecured, redeemable, non-convertible debentures, raising ₹3,300 crore. The debentures, rated AA- with a stable outlook by ICRA Limited, were subscribed by major international banks. The funds are earmarked for acquiring shares of Akzo Nobel India Limited, a move expected to significantly boost JSW Paints' position in the Indian paints market.
JSW Paints Limited has announced the successful completion of its maiden issuance of listed, rated, unsecured, redeemable, non-convertible debentures (NCDs), aggregating ₹3,300 crore. These NCDs have received an 'AA-' rating with a stable outlook from ICRA Limited, indicating a low risk of default.
The issuance saw participation from prominent financial institutions, including MUFG Bank, Ltd., GIFT Branch, Mizuho Bank Ltd., Singapore Branch, JP Morgan Chase Bank, N.A., Barclays Merchant Bank (Singapore) Limited, Sumitomo Mitsui Banking Corporation, and DBS Bank Limited.
Khaitan & Co served as legal advisors to JSW Paints for this significant transaction, with partners Manisha Shroff and Arijit Sarkar leading the deal structuring, documentation, and overall coordination. TT&A advised the consortium of banks involved in the issuance, with partners Rahul Gulati and Rituparno Bhattacharya spearheading their legal team.
The primary objective for utilizing the proceeds from this NCD issuance is to fund the acquisition of shares in Akzo Nobel India Limited. This strategic move is poised to transform JSW Paints into a major contender within the highly competitive Indian paints market.
Impact
This substantial fundraising and planned acquisition signal aggressive growth ambitions for JSW Paints. It could lead to significant market consolidation, increased competition, and potentially affect pricing and product offerings in the Indian paint sector. For investors, it highlights JSW Paints' strategic direction and financial maneuvering. Rating: 8/10
Difficult Terms Explained:
Non-Convertible Debentures (NCDs): These are debt instruments issued by companies to raise money. Unlike convertible debentures, they cannot be converted into equity shares of the issuing company. They typically offer fixed interest payments over a specific period and the principal amount is repaid on maturity.
Listed: Securities (like NCDs or stocks) that are admitted for trading on a recognized stock exchange.
Rated: The credit quality of the debt instrument or issuer has been assessed by a credit rating agency like ICRA.
Unsecured: The debentures are not backed by any specific collateral or asset of the company. This means that in case of default, debenture holders have a claim on the company's general assets, but not on specific ones.
Redeemable: The debentures have a maturity date, after which the issuer is obligated to repay the principal amount to the debenture holders.
AA-: This is a credit rating assigned by ICRA. 'AA' signifies high safety, and the minus sign (-) indicates it is in the upper end of the 'AA' category. It suggests a very low risk regarding the company's ability to meet its financial obligations.
Stable Outlook: This indicates that the credit rating agency expects the credit rating to remain unchanged over the medium term, barring any significant unforeseen events.
Inter alia: A Latin legal term meaning 'among other things'. It is used to indicate that a list of items or actions is not exhaustive.
Acquisition: The process where one company purchases most or all of another company's shares or assets to gain control of that company.
