PharmEasy in Talks to Raise $200M at Lower Valuation
PharmEasy is in talks with investors to raise $200 million, but at a value that might be 15% or even 25% lower than last year’s $5.1 billion, according to two people with direct knowledge of the conversations. (report by Reuters)
Website: https://pharmeasy.in/
Who’s Investing?
PharmEasy, which is backed by big-name investors like as Prosus, TPG, and Temasek, is in talks to secure the new capital at a value that is up to 15% lower than last year’s.
Some outlets also say that a 25% decrease is possible in order to seal the purchase. This could reduce PharmEasy’s valuation for the fresh investment round to $3.8 billion, and insiders say an initial public offering (IPO) originally scheduled for 2022 has been pushed back.
Uncertain global and local stock markets, as well as growing investor scepticism about what they perceive to be sky-high valuations, have shaken Indian entrepreneurs, making it difficult for PharmEasy to seek financing at the same or higher value, according to sources. They declined to be identified because the fund-raising discussions were confidential.
According to the first source participating in the talks, PharmEasy’s proposed capital raising will include involvement from some existing investors who have indicated they will commit roughly $115 million in the next round.
In a boom period, the company’s valuation has risen in recent years. for India’s startups in general, as well as a spike in its own sector, Reliance’s Netmeds, Tata’s 1mg, and Walmart’s Flipkart are among the competitors.
Indian startups raised a record $35 billion in private capital last year, and many internet companies went public. PharmEasy, too, cashed in on the boom, raising a total of $1.89 billion since 2015, the majority of which came in the last two years, according to Pitchbook data.
PharmEasy’s ‘down round’ deal – when a company sells shares at a lower valuation than before – will be the first in recent times among high-profile Indian startups.
According to the sources, the deal is being worked on by Bank of America Securities and Morgan Stanley. Morgan Stanley and Bank of America both declined to comment.
IPO on hold due to growing losses
API Holdings filed a prospectus last year to raise 6250 Crores ($782 million) in an IPO, expecting to list in 2022, betting on rising healthcare spending and growing use of online ordering. According to news sources, the proposal has been postponed.
PharmEasy looks to be in a “wait and see” phase and is considering listing next year. Market participants expect the IPO may not take place until late in 2023, and PharmEasy’s parent may be needed to refile IPO regulatory papers.
The IPO postponement comes as the stocks of big Indian IPOs from last year, such as digital payments business Paytm and food-delivery firm Zomato, have dropped more than 60% from their peaks.
Financials Update
FY 21-22:
Total Income : $714 million (~Double of LY)
Total Expenses : $1.06 billion (Partly due to a one-time employee stock benefits outlay)
Net Loss : $334 million (quadrupled from LY)
Pre IPO/Unlisted Markets Valuation
Current number of shares outstanding : 614.2 Crores as per MCA as on 19th July
At CMP of 40Rs/sh : 24,568 Crores or 3.07 B$ (Present Valuation in Pre IPO Markets)
Let’s see, what is the next round expected at :
Last Institutional Round was at 5.1 B$ – – –
At 15% Discount : 4.33 B$
At 25% Discount : 3.82 B$
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