Press Release

VIS Assigns Preliminary Rating to Proposed BLR of OBS Pharma (Private) Limited

Karachi, July 03, 2023: VIS Credit Rating Company Ltd. (VIS) has assigned preliminary rating of ‘A+(blr)’ (Single A plus (blr)) to the proposed Islamic Syndicated Financing facility of PKR. 5,250 mln of OBS Pharma (Private) Limited (OBS Pharma). Rating of ‘A+(blr)’ signifies good credit quality with adequate protection factors. Risks may vary with possible changes in the economy. Outlook on the assigned rating is ‘Stable’.

OBS Pharma (Pvt.) Limited is a Special Purpose Company (SPC)created to acquire 12 pharmaceutical brands and a manufacturing facility based in Lahore from Bayer. It is a 100% subsidiary of Aitkenstuart Pakistan (Pvt.) Limited, with the ultimate parent company being West End 16 Pte Limited, Singapore. The agreement for the acquisition was made on November 21, 2022, for a total cost of Rs 7,000 mln, payable in two tranches. The proposed capital structure consists of 75% debt (PKR 5,250 mln) and 25% equity (PKR 1,750 mln), sourced through a Syndicated Islamic Financing facility and Aitkenstuart's equity injection via a rights issue.

The facility has a tenor of 7 years (including 18 months grace period). Principal amount will be redeemed through 22 equal, consecutive quarterly installments, starting from the twenty-first month post the initial disbursement. It is secured with a First Pari Passu charge over all current and future fixed assets of OBS Pharma, which includes but is not limited to the Bayer PK manufacturing facility being acquired, inclusive of a 20% margin, a First Pari Passu charge over all current and future fixed assets of Aspin Pharma (Pvt.) Limited, inclusive of a 20% margin, a Corporate Guarantee provided by Aitkenstuart Pakistan (Pvt.) Ltd., and a Lien on the Collection and Finance Payment Account (FPA). A portion of the acquisition transaction is dollar denominated, hence, is exposed to exchange rate risk. Management has informed, that any increase in transaction costs arising from exchange rate volatility will be financed through further equity injection or internal cash flows.

Assigned rating takes comfort from being part of a leading group in the healthcare segment. At present, OBS ranks amongst the top ten local pharmaceutical groups in Pakistan with a group turnover of ~PKR 19,000 mln in CY22. Furthermore, rating takes into account business risk profile supported by non-cyclical nature of the industry and steady demand growth.

The acquired portfolio predominantly comprises of women’s healthcare and dermatology products, with leading brands namely Ciproxin, Gravibinan, Travocort, and Primolut N. Rating incorporates the leading position of the brands in their respective molecular categories. High relative market share and brand value of these major products provides comfort to rating, albeit product portfolio concentration remains high. Gradual growth in profitability indicators is anticipated due to expected price increases and an increase in volumetric sales through organic growth of the current portfolio further supported by enhanced marketing efforts planned for the target products. However, currency volatility poses a risk to profit margins. The rating incorporates sufficient debt servicing over the rating period, with additional support from the parent’s corporate guarantee. Liquidity indicators also indicate long-term improvement. Going-forward ratings are dependent upon improvement in leverage indicators.

Rating remains sensitive to continued availability of the corporate guarantee, the maintenance of a solid debt servicing cushion, and the reduction in leverage indicators in line with the projections over the rating period.

For further information on this rating announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 201) at 021-35311861-64 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2023)
VIS Bank Loan Rating Criteria Methodology (November 2018)

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