API Holdings, which operates health-tech unicorn PharmEasy, has filed its drafts red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise Rs 6,250 crore through an initial public offering (IPO).
API Holdings’ pre-IPO round, which wrapped in October 2021, valued the e-pharmacy startup at $5.4 billion. The issuance will solely comprise a primary share sale and existing investors won’t offload their stakes in the IPO.
This will distinguish out among a bunch of notable tech startup IPOs happening in India, including Zomato, Nykaa, Paytm, Policybazaar, and Delhivery, as the only one without a secondary sale to existing shareholders. The company may consider a pre-IPO private placement funding round of up to Rs 1,250 crore after consulting with the BRLMs (Book running lead manager).
The company seeks to use about Rs 1,929 crore of the net proceeds from the IPO to prepay or repay all or a portion of certain outstanding debts held by the company as well as its subsidiaries. The company further plans to use Rs 1,259 crore for organic growth operations, while Rs 1,500 crore will be used for inorganic growth via acquisitions and other strategic initiatives.
The public issue’s bankers include BofA Securities India Limited, Citigroup Global Markets India Private Ltd, Kotak Mahindra Capital Company Ltd, Morgan Stanley India Company Private Ltd, and JM Financial Ltd.
According to the DRHP, Naspers Ventures owns the largest stake in the company, accounting for 12.04 percent. Followed by Macritchie Investments Pte which holds 10.84 percent while Surbhi Singh and Universal Trustees Private Limited possess 6.70 percent of the company. TPG Growth owns 6.65 percent and Siddharth Shah, the company’s co-founder, CEO, and Managing Director hold a 1.32 percent share. PharmEasy is also backed by Tiger Global Management, Lightstone, B Capital.
PharmEasy reported a loss of Rs 641.3 crore in the fiscal year ending March 31, up from Rs 335.2 crore in the previous fiscal year. The company’s revenues skyrocketed by 220 percent from Rs 737.4 crore in FY 2020 to Rs 2,360 crore in FY 21. Similarly, the company’s expenses increased by 174.8 percent to Rs 2,980.9 crore in FY 21, up from Rs 1,084.4 crore in FY 20.
The Mumbai-based e-pharmacy startup raised $350 million in primary and secondary funding in October. The firm raised almost $204 million in a primary round during the pre-IPO round. The round featured participation from Amansa Capital, Abu Dhabi’s sovereign wealth fund ADQ, US hedge fund Janus Henderson, OrbiMed, Blackstone-backed hedge fund ApaH Capital, Steadview Capital, hedge fund Neuberger Berman, and London’s Sanne Group.
PharmEasy, which was founded in 2015 by Dharmil Sheth and Dr. Dhaval Shah, merged with its investor firm, Ascent Health, to incorporate API Holdings in 2019. This resulted in the addition of three more cofounders: Hardik Dedhia, Siddharth Shah, and Harsh Parekh.
PharmEasy claims to integrate more than 60k brick-and-mortar pharmacies with 4K+ doctors across India throughout 16K+ pin codes. It also offers SaaS procurement solutions, delivery and logistics assistance, and pharmacy credit solutions. Since its inception, the company claims to have assisted over 20 million patients.
