PharmEasy calls off its public offer; to go for rights issue instead

API Holdings, the parent company of PharmEasy, wrote to shareholders announcing withdrawal of DRHP

API Holdings, the parent firm of online pharmacy PharmEasy, has decided to withdraw its draft red herring prospectus (DRHP) filed with Securities and Exchange Board of India (Sebi), citing volatile market conditions and ‘strategic considerations’. The DRHP was filed on November 9, 2021.

The company has informed its shareholders that it has decided to go ahead with a rights issue instead. 

Further, API Holdings stated that the rights issue is planned around the first week of September and shall have compulsory convertible preference shares (CCPS) on offer. The issue price would be set at Rs 100 per CCPS.

According to media reports, PharmEasy had plans to raise around Rs 6,250 crore from its public offering. It had raised funds at a valuation of $5-5.7 billion in a pre-IPO round.

In July, there were reports that PharmEasy was trying to raise around $200 million via private placement, but at a lower valuation--by as much as 25 per cent as per reports.

“The decision to raise money by lowering valuation once again shows the difficulty that startups are facing in raising capital now. A global recessionary environment has made investors reluctant in investing in startups that have still not turned profitable," India Infoline, a financial services company, said.   

"PharmEasy's losses in 2022-23 are reported to be around $324 million. Like many internet-based business model, startups, PharmEasy is seeing strong sales but even higher expenses. In 2022-23, its sales are reported to be around $700 million,” it further added.

In June 2021, PharmEasy had acquired diagnostic chain, Thyrocare Technologies, for Rs 4,546 crore. A few months later, the company turned unicorn after raising a $350 million in a round co-led by Prosus Ventures and TPG Growth.

It counts Tiger Global, Temasek, Eight Roads, and Think Investments as investors.