Hubergroup India, a global printing inks and chemicals specialist, is in discussions with various lenders, including ICICI Bank, Axis Bank, HDFC Bank, Tata Capital, Axis Finance, and ICICI Prudential Credit Fund, to borrow Rs 1,500 crore in working capital, amortizing funds, and bullet loans at costs ranging from 9% to 14%. Part of the funds will be used to buy out businesses from its German parent.
“Hubergroup India, one of the largest in manufacturing globally, is borrowing money to buy out many businesses from the German parent, so that the Indian entity will become the flagship entity for the group,” a source said.
While talks with ICICI Bank, HDFC Bank, and Axis Bank are ongoing, the finalisation is pending. Among NBFCs, Tata Capital and Aditya Birla Finance are in talks, and discussions with ICICI Prudential Credit Fund and Axis Finance are underway in the credit fund space.
The proposed funding structure involves Rs 500 crore from banks for working capital at around 9%, Rs 500 crore from NBFCs for amortizing loans at 10-11%, and Rs 500 crore from a private credit fund for bullet loans at 13-14%.
The debt raise could be finalised by next week, the source said.
Spokespersons of Hubergroup India, ICICI Bank, HDFC Bank, Axis Bank, Tata Capital did not respond to requests for comment while a ICICI Prudential MF spokesperson declined to comment and Aditya Birla Finance could not be reached immediately for comment.
The funds will be used for purchasing businesses from the parent company. In 2005, Micro Inks was acquired by Germany-based Hubergroup, which strengthened its position as the market leader in the Indian print market with a 30% share. Hubergroup’s clients include major print media publication houses, packaging, and FMCG companies in India.
The company maintains strong liquidity, marked by good cash accruals, despite regular large dividends to its parent. , according to a credit rating report. As of December 31, 2022, the company’s working capital cycle has marginally improved post-COVID-19, with the average utilisation of fund-based working capital limits improving.
“The company has a healthy business risk profile, characterised by its market leadership position, integrated operations and also supported by diversity in end-user industries and geographies,” said Crisil in a note in 2022. “While revenues from the printing ink segment are expected to be at similar levels due to volume loss owing to consumer shift toward digital sources for newspapers; it is expected to be compensated by increase in the packaging ink due to rise in FMCG and ecommerce industries.”
