Persistent Systems is likely to raise more than ₹6,000 crore through non-convertible debentures, or NCDs, as it finalises the debt financing for its acquisition of Germany’s Nagarro SE. A person familiar with the details said the debt could be raised as early as next week.

The Indian IT services company wants to complete the acquisition it announced in June, and the bond sale is the second half of a two-step fundraise. Persistent first raised ₹4,264 crore through a qualified institutional placement of shares earlier this week.

Equity first, debt second

The QIP covered part of the bill. The NCD issue is designed to cover most of the rest. According to the sources, the total value Persistent has to pay for Nagarro comes to around $1.25 billion. Of that, $450 million has come from the QIP, and the remainder will be raised through debt.

The structure reflects a clear priority. The company is not willing to carry a short-term bridge loan on its balance sheet. That bridge facility, an 18-month commitment secured from Barclays, is set to be replaced by the NCD proceeds.

The company does not want to keep a short term bridge loan on its books which will have to be refinanced ultimately.

That line explains the urgency. A bridge loan is a stopgap. It buys time but eventually has to be refinanced, and Persistent appears determined to swap it for longer-dated money before that pressure builds.

What the bonds look like

The NCDs will come in several tenures, matched to the company’s expected cash flows. They will start at one year and extend up to five years, with an average maturity of about three years. The NCDs are likely to be priced between 8.75% and 9.50%.

Underwriting will be handled by HSBC and Barclays. Both banks declined to comment.

A smaller portion of the deal may take the form of one-year commercial paper, with the rest made up of NCDs. The longer-tenure proceeds will most likely be earmarked for general corporate purposes, a second person aware of the details said.

A deal that goes beyond size

The Nagarro transaction is one of the biggest overseas acquisitions ever made by an Indian IT services firm. Persistent launched a voluntary public takeover offer in June to acquire all outstanding shares of Nagarro SE. The offer was made through its subsidiary, Galaxy Germany.

The progress has been substantial. Earlier this month, Persistent announced it had secured 94% of Nagarro shares. Shareholder offers represented approximately 71.94%, which were added to the roughly 22.10% stake Persistent had already secured earlier.

That gap between the stake and the full price is what the debt is meant to close. Without the NCDs, the company would have to carry a bridge loan that it has said it does not want on its books.

Why the timing matters

The fundraising is moving fast. The QIP came first, the NCDs could follow within days, and the company aims to finish the acquisition on that timeline. For a mid-sized global IT player stretching into Europe, the pace signals confidence in both its funding and its target.

Investors will be watching the pricing closely. A coupon range of 8.75% to 9.50% will show how the market views the credit risk of taking on a large acquisition debt load in one go. The final numbers will determine how expensive the Nagarro deal ends up being in the long run.

The banks involved have not confirmed any terms publicly. Both HSBC and Barclays declined to comment, so the details currently come from people familiar with the plan rather than official statements.

What comes next

The next checkpoint is the NCD issue itself. If it goes ahead next week as expected, Persistent will have funded the bulk of its Nagarro purchase in a matter of days. That would close the gap between the company’s ambitions and its balance sheet, and replace a short-term loan with multi-year debt.

For now, the signal is clear. Persistent is not stalling. It is moving to lock in financing, retire its bridge facility and push toward completing one of the largest overseas deals in the history of Indian IT services.