API Holdings, the parent company of online pharmacy PharmEasy, recently closed a funding round of Rs 1,804 crore ($216 million), with Ranjan Pai’s Manipal Education and Medical Group (MEMG) leading the investment. However, this funding round has brought about a significant adjustment in PharmEasy’s valuation, marking a 90% decrease from its peak value.
According to regulatory filings sourced from the Registrar of Companies (RoC), the board of API Holdings approved a special resolution to issue 18,63,74,897 cumulative convertible preference shares at an issue price of Rs 96.8 each, raising Rs 1,804 crore.
MEMG family office contributed Rs 800 crore to lead the round, with Prosus, Temasek, and 360 One Portfolios injecting Rs 221 crore, Rs 183 crore, and Rs 200 crore, respectively. CDPQ Private Equity, WSSS Investments, Goldman Sachs, and Evolution Debt Capital invested Rs 400 crore in the round.
The company plans to convert the cumulative convertible preference shares into equity shares at a ratio of 1:20, as stated in the filings.
This funding comes after the Competition Commission of India (CCI) cleared Ranjan Pai’s investment in PharmEasy last month. PharmEasy has been seeking to raise approximately Rs 3,500 crore since August last year to repay debt taken from Goldman Sachs. Following a default on its loan terms with Goldman Sachs in June of the previous year, PharmEasy saw a reduction in its valuation by around 50% by investor Janus Henderson. Neuberger Berman also slashed PharmEasy’s valuation by 21.4% to $4.4 billion as of February 2023.
The company, led by Dharmil Shah, had previously filed draft papers with market regulator SEBI for an IPO but postponed its listing plan due to challenging market conditions after filing the DRHP in November 2021 and withdrawing its plan in August 2022.
PharmEasy’s challenges have been widely discussed, mainly after it acquired Thyrocare. Despite poor results from its expansion into diagnostics, the recent fundraising should alleviate doubts about the firm’s future. However, the lack of funding will lead to significant dilution for the promoters. This serves as a lesson for many startups, with the hope that PharmEasy will have another opportunity to make history.
