Jhunjhunwala's firm Rare in talks with Barclays to prepay Rs 500 crore loan

The loan was used to fund the acquisition of Zydus Cadila's animal healthcare business in 2021

Late Rakesh Jhunjhunwala's Rare Equity Pvt Ltd (REPL) has reportedly approached Barclays with a proposal to repay a loan of Rs 500 crore. The loan was taken in 2021, according to a report by Economic Times (ET). 

The loan was used to fund the acquisition of Zydus Cadila's animal healthcare business. It was raised using zero-coupon bonds. 

Rare issued non-convertible debentures to Barclays in two tranches. It gave returns of 7.75 per cent to the British bank. 

"It was an unusual offering," a bond trader told ET. "Before that, I don't recall Jhunjhunwala having ever borrowed from the bond market. Rare Enterprises or other firms he controlled had very little debt," he added.

Under the market rules, in the absence of a put or call option, a prepayment of such loans attracts charges. 

"Understandably, officials of Rare Enterprises would negotiate to lower any prepayment charge. This could well be part of an overall decision to pay off whatever debt they have and focus only on long-term investments," ET quoted a person aware of the matter as saying. 

The officials of Rare and Barclays have already initiated the talks. If the deal goes forward, the loan can be repaid in the current year itself. 

The loan is backed by Jhunjhunwala's personal guarantee and stocks. It is among REPL's bids to reorganise after the death of the iconic investor on August 14, 2022. 

REPL was incorporated on October 12, 1993, in Mumbai. Apart from market research and business consultancy, it also provides tax consultancy, auditing services and accounting services. 

Since Jhunjhunwala's death, REPL is managed by his long-time associates Utpal Seth and Amit Goela.