PharmEasy, a prominent online pharmacy, has informed its board and investors that it intends to raise approximately Rs 2,400 crore through a rights offering at a 90% lower stock price to assist in repaying its debt from Goldman Sachs, sources familiar with the matter told ETtech.
Ranjan Pai, head of the Manipal group, is anticipated to join the business board. According to these sources, existing owners TPG and Temasek are driving the rights offer. Pai of Manipal Hospitals is probably going to invest in the rights offering as well, according to sources familiar with the situation.
To enable shareholders to buy more shares, a corporation will execute a right issue.
Documents obtained by ETtech state that API Holdings, the parent company of PharmEasy, intends to issue fresh shares at Rs 5 per share. At its height, API Holdings raised money at a price of Rs. 50 per share. The Mumbai-based e-pharmacy platform, which also owns Thyrocare, a diagnostics company, had a valuation of $5.6 billion as of 2021.
According to ETtech’s projections, the rights issue will probably occur at a valuation of between $500 and $600 million. According to a source close to the company, PharmEasy’s prior valuation, when accounting for exchange rates, would have been about $4.6 billion.
PharmEasy, which shelved plans for an initial public offering (IPO) last year, had seen its share price rise to even Rs 130 at one time before the markets soured on new-age startup companies and general market turbulence. According to ETtech, PharmEasy shares dropped to a price range of around Rs 20 on the grey market, signifying a reevaluation of the company’s valuation.
One of the first significant down rounds for a sizable internet company through fresh financing would occur if the rights issue is approved at the suggested value. When a privately owned company raises money at a lower valuation than its prior round, this is referred to as a down round. While public market investors and crossover funds have been devaluing their shares in Indian digital businesses, the local ecosystem has not yet experienced a down round via a new fundraise, which has been happening in the US and European markets for some time.
The investors and board have in principle agreed to offer new employee stock options to the founders and the firm’s employees in order to make up for the significant value erosion, the sources continued.
Siddharth Shah, co-founder and CEO of PharmEasy, is anticipated to meet the team on Wednesday to discuss the latest investment round and the distribution of stock options to employees.
