IPO Update: PharmEasy Parent Gets SEBI Nod for Rs.6,250 Crore IPO

The Parent Company of PharmEasy, API Holdings, has received approval from India’s securities regulator, the Securities and Exchange Board of India, for the online pharmacy’s initial public offering.

API Holdings, based in Mumbai, filed draught IPO papers in November in order to raise Rs 6,250 crore through the sale of primary shares. Existing shareholders have no plans to sell their stock. The company API Holdings owns an umbrella of brands including PharmEasy, Thyrocare, Docon, Retailio, and Aknamed.

In the Rs 2,635.22 Crore pre IPO round in October, the online pharmacy start-up was valued at $5.6 billion (Rs 42,197.79 crore).

PharmEasy, which was founded in 2015 by Dharmil Sheth and Dhaval Shah, claims to connect more than 60,000 pharmacies and 4,000 doctors in 16,000 zip areas across the country. In addition, the startup claims to have served over 20 million consumers.

The company is a fully integrated, end-to-end healthcare provider that offers digital tools and information on sickness and wellness to consumers, as well as teleconsultation, diagnostics and radiological tests, and treatment protocols, including products and devices.

The start-up also intends to make a pre-IPO placement offer for an amount not exceeding Rs 1,250 crore, which will be done in conjunction with the book running lead managers. The issue size will be lowered by the amount raised from the pre-IPO placement and the minimum issue size if the pre-IPO placement is done.

As per the company’s DHRP in Nov 2021, “The issue so reduced by the amount raised from the pre-IPO placement shall constitute at least 10% of the post-issue paid-up equity share capital of our company,”

During the financial year ended March 31, 2021, the pharmacy start-up reported revenues of Rs 2,335.26 crore, up from Rs 667.54 crore in FY20. In FY21, it lost Rs 641.33 crore, compared to Rs 335.27 crore in FY20.

PharmEasy has raised over $1.2 billion in equity and loan funding to date, with its most recent major acquisition being the $600-million purchase of diagnostics chain Thyrocare in June of this year.

According to PharmEasy, there is no known promoter. Naspers, a South African Internet holding company, and Temasek, a Singaporean investment corporation, are two of its top shareholders, with 12.04 percent and 10.8 percent shares, respectively.

A recent analysis by Bernstein Research, PharmEasy has half of the market share in online pharmacy gross merchandise value, compared to 1mg, which is owned by Tata, and Netmeds, which is owned by Reliance Industries.

The Sebi’s approval for PharmEasy parent’s IPO comes at a time when new-age businesses’ share values have been steadily declining since going public last year. During trading hours on Monday, Paytm, Nykaa, Policybazaar, and CarTrade all hit new lows. One97 Communications, the parent company of Paytm, has lost more than 60% of its value since its high, while Nykaa has lost 42% of its value.

The IPO’s main bankers include Morgan Stanley India, BoFA Securities India, Kotak Mahindra Capital, JM Financial, and Citigroup Global Markets India.

In April 2021, PharmEasy became the first unicorn in the online pharmacy start-up market.

The market regulator expects the robust pace in India’s initial public offering (IPO) market to continue, as two more companies, Wellness Forever Medicare Ltd and CMR Green Technologies Ltd, have received approval.