Online pharmacy startupis looking for funding at a 90% markdown from its last valuation to pay back a loan.
According to The Economic Times, the healthtech company plans to raise Rs 2,400 crore ($290 million approx) through a rights issue to repay a loan from Goldman Sachs, it has told its board and investors.
The rights issue will be led by PharmEasy’s existing shareholders TPG and Temasek. As per a MoneyControl report, the Manipal Group has expressed interest in investing Rs 1,800 crore for an 18% stake in API Holdings, the parent company of PharmEasy and Thyrocare.
The company’s board is expected to include Ranjan Pai, Chairman of the Manipal Group, which has a stake in Manipal Hospital.
API Holdings will be issuing new shares at Rs 5 per share in its rights issue. This will be a 90% discount to its stock price, having previously raised funds for around Rs 50 per share. The rights issue will likely result in a valuation of $500 million to $600 million.
PharmEasy had borrowed Rs 2,280 crore ($285 million) from Goldman Sachs in August last year to pay off an earlier debt incurred from Kotak Mahindra Bank to buy . The five-year loan attracted a 17%-18% annual interest rate.
The company hoped to repay Rs 2,000 crore of debt from the proposed Rs 6,250 crore IPO proceeds. However, with API Holdings’ plans to go public pushed back by two years to 2025, and hopes to raise pre-IPO capital of up to $300 million falling through last year, raising capital may not be so easy.
In May, top Pharmeasy investor Janus Henderson slashed the company’s valuation to $2.8 billion. This was the second such markdown in the e-pharmacy’s valuation this year. In May, US investment Neuberger Berman slashed the valuation of API Holdings to $4.4 billion in a filing with the US SEC.
The healthtech company’s previous valuation on a dollar-adjusted basis stood at about $4.6 billion, suggesting it’s raising funds at a valuation 90% below its peak, as the ET report.
Founded in 2015 by Dharmil Sheth and Dhaval Shah, PharmEasy offers a range of services including wellness tools and information, consultations, diagnostic, radiological testing and treatment.
In April 2021, the company became a unicorn and was valued at $1.5 billion. Two months later, it acquired a 66% stake in listed laboratory testing company Thyrocare for Rs 4,546 crore.
The company’s backers include TPG, Prosus, Temasek, B Capital, Bessemer Venture Partners, Eight Roads Ventures, Steadview Capital, and JM Financial, among others.