API Holdings, the parent company of online pharmacy major PharmEasy and promoter of Thyrocare, is exploring various avenues to secure funds of upto Rs 2,500 crore including tapping investors or through a rights issue. The move comes at a time when API Holdings is aiming to strengthen its financial position and pare debt.
However, these deals are expected to value PharmEasy at Rs 5,000-6,000 crore, down 80-90% from the earlier valuations.
The holding company is believed to be in advanced stages of talks with Manipal Group for the fund raise. If the talks reach a conclusive stage, the group would lead the fund raise – with an investment of upto Rs 1,000 crore for an 18% stake in API Holdings – as existing investors in API Holdings would also take part, industry sources in the know said.
API Holdings had earlier pledged shares of Thyrocare with Goldman Sachs and others for raising debt. The firm has to “urgently” repay a debt of about Rs 2,500 crore so as to avoid invoking pledged shares, sources added.
Docon Technologies, a promoter entity of Thyrocare, owns 71% in the company.
API Holdings is estimated to have closed fiscal year 2023 with net revenue of Rs 6,847.2 crore, according to investor presentations seen by ETtech. In FY22, the revenue figure stood at Rs 6,466 crore.
Further, the firm would also look at a rights issue of about Rs 2,500 crore for PharmEasy to repay the debt. The firm has reached out to existing shareholders including private equity majors TPG and Temasek for the rights issue.
PharmEasy was earlier planning to raise funds through an initial public offering (IPO), and had sought regulatory approvals in 2021. However, it withdrew the plans later citing market conditions and strategic considerations.
The various modes of fund raising are being looked at as start-ups and e-commerce firms are finding it difficult to raise due to ‘funding winter’, which is expected to last at least for some more quarters, industry experts said, adding this has also resulted in startups shelving their IPO plans.
According to the draft red herring prospectus it filed with the Sebi for the IPO, PharmEasy’s services include digital tools and information on wellness, teleconsultations, diagnostic and radiology tests and treatment deliveries. The investors in the company include TPG and Temasek Holdings.
According to media reports, PharmEasy had posted an Ebitda of Rs 14 crore in April 2023. For FY23, API Holdings recorded a net revenue of Rs 6,847 crore, an increase from Rs 6,466 crore posted during the same period a year ago.
