Amid tough market conditions, API Holdings, the parent company of online pharmacy company PharmEasy, has decided to delay its IPO plans.
The Company informed its shareholders that it has also withdrawn the draft Red Herring Prospectus (DRHP) filed with SEBI on November 9, 2021, citing market conditions and strategic considerations.
In its DRHP, PharmEasy had stated that it was planning an increase Rs 6,250 crore from its public listing. Previously, PharmEasy had raised funds valued at $5.5 billion to $5.7 billion in a pre-IPO round, it said Fintrackrs estimates. In February, the company also received approval from SEBI for the planned IPO.
The reference to the postponement of PharmEasy’s IPO stemmed from the fact that the company was in the market to raise $200 million 25% haircut in the assessment.
untrackr has sent requests to API Holdings for more information on the development. We’ll update the story if the company responds.
The seven-year-old pharmacy startup drew everyone’s attention in June 2021 acquired Diagnostic chain Thyrocare Technologies for about Rs 4,546 crore. A few months earlier, PharmEasy had become one unicorn after raising a $350 million round co-led by Prosus Ventures and TPG Growth. The startup counts Tiger Global, Temasek, Eight Roads and Think Investments among its marquee investors.
Of the proposed capital raised through the IPO, the company planned to spend Rs 1,929 crore to prepay or repay all or part of certain outstanding loans. A further investment of Rs 1,259 crore was planned to fund organic growth initiatives and improvement of supply chain and technology infrastructure.
A further Rs 1,500 crore should be used for inorganic growth through acquisitions and other strategic initiatives and the remainder for general corporate purposes.
PharmEasy’s plans for an IPO came after startups like Zomato and Paytm failed to impress the investors at their public appearance.
The pre-market run for PharmEasy was not without its hurdles. According to an, the existing shareholders are not interested in selling their shares economic times report in February. Although that doesn’t necessarily have to be a bad thing, given the recent market aversion to secondary offerings.
A potentially bigger problem, however, is the company’s response to increasing competition, which has intensified in both its now-important diagnostics business and pharmaceutical distribution business. Top business houses such as Tata’s (over 1mg), Reliance (through Netmeds) and even the Adani Group have now entered the market, alongside Adar Poonawalla through his investments in Mylab Discovery.
With IPO plans on hold for now, it should be interesting to see how and when PharmEasy will raise funds for the initiatives it had talked about in its DRHP.
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