Manipal Education and Medical Group (MEMG), led by Ranjan Pai, and current investors have contributed a total of Rs 1,804 crore ($216 million) to API Holdings, the parent company of online drug dispenser PharmEasy. However, the new funding has come with a 90% valuation reduction from the company’s peak worth.
According to API Holdings’ regulatory filing obtained from the Registrar of Companies (RoC), the board approved a special resolution to allot 18,63,74,897 cumulative convertible preference shares at an issue price of Rs 96.8 per share in order to raise Rs 1,804 crore.
The round was led by the MEMG family office, which invested Rs 800 crore. Prosus, Temasek, and 360 One Portfolios contributed Rs 221 crore, Rs 183 crore, and Rs 200 crore, in that order.
A total of Rs 400 crore was contributed to the new investment by CDPQ Private Equity, WSSS Investments, Evolution Debt Capital, and Goldman Sachs.
The filings further stated that the company will convert the CCPS-issued into equity shares at a ratio of 1:20.
The company’s estimated valuation in the media is Rs 5,904 crore, or $710 million (post-allotment). PharmEasy’s valuation, which was previously estimated to be worth $5.6 billion in 2021, has dropped by almost 90%.
Ranjan Pai’s investment in PharmEasy was approved by the Competition Commission of India (CCI) last month.
Attempting to raise approximately Rs 3,500 crore since August of last year, the Mumbai-based company is paying back debt that it acquired from Goldman Sachs. In June of last year, PharmEasy missed payments on its Goldman Sachs loan. Janus Henderson, one of the company’s investors, decreased the company’s valuation by about 50% at the same period. Neuberger Berman also reduced PharmEasy’s February 2023 valuation to $4.4 billion, a decrease of 21.4%.
Included in the list of startups that delayed their IPO plans after submitting draft documents to market regulator SEBI is the Dharmil Shah-led business. Due to challenging market conditions, the company withdrew its listing plan in August 2022 after filing a DRHP in November 2021.
In comparison to the previous fiscal year, which ended in March 2022, PharmEasy’s revenue increased by 16% to Rs 6,644 crore from Rs 5,729 crore in FY22. The company reportedly reduced its losses to Rs 2,289.8 crore in FY23 from Rs 2,731.7 crore in FY22, according to the media.
The difficulties faced by PharmEasy are widely known, particularly after it acquired Thyrocare. Any remaining uncertainties regarding the firm’s future should be dispelled by the most recent fundraising. The company’s attempt to enter the diagnostics market has not gone well, and the current funding will dilute the promoters far more than they had anticipated.
