PharmEasy Raises $216 Million Despite Reduced Valuation of $710 Million

API Holdings, the parent company of the online drug dispenser PharmEasy, has recently secured funding of Rs 1,804 crore ($216 million). The investment was led by Manipal Education and Medical Group (MEMG) owned by Ranjan Pai, along with contributions from existing investors. However, the company’s valuation has taken a significant hit, dropping by 90% from its previous peak worth.

According to a regulatory filing from the Registrar of Companies (RoC), the board at API Holdings passed a special resolution to issue 18,63,74,897 cumulative convertible preference shares at Rs 96.8 per share, raising the total amount. The MEMG family office led the round with an investment of Rs 800 crore, followed by Prosus, Temasek, and 360 One Portfolios with contributions of Rs 221 crore, Rs 183 crore, and Rs 200 crore respectively.

CDPQ Private Equity, WSSS Investments, Goldman Sachs, and Evolution Debt Capital also took part in the funding with a cumulative investment of Rs 400 crore. As per TheKredible’s estimates, the company’s post-allotment value stands at around Rs 5,904 crore or $710 million. This marks a significant decrease of 90% from PharmEasy’s previous valuation of $5.6 billion in 2021.

In December 2021, the Competition Commission of India (CCI) approved Ranjan Pai’s investment in PharmEasy. The Mumbai-based company has been trying to raise approximately Rs 3,500 crore since August last year to repay debts taken from Goldman Sachs. In June last year, PharmEasy failed to meet its loan terms with Goldman Sachs. Around the same time, its investor Janus Henderson reduced the company’s valuation by 50%.

In February 2023, Neuberger Berman also decreased PharmEasy’s valuation by 21.4% to $4.4 billion. The company, led by Dharmil Shah, is among the startups that postponed their IPO plans after filing draft papers with market regulator SEBI. PharmEasy filed for DRHP in November 2021, but due to unfavorable market conditions, it decided to withdraw its listing plan in August 2022. In the fiscal year ending March 2023, PharmEasy recorded a 16% growth in revenue, reaching Rs 6,644 crore compared to Rs 5,729 crore in FY22.

As per startup data intelligence platform TheKredible, the company also managed to reduce its losses to Rs 2,289.8 crore in FY23 from Rs 2,731.7 crore in FY22. PharmEasy’s struggles have been well-documented, especially after it acquired Thyrocare. However, this recent funding should put any doubts about the company’s future to rest. The company’s expansion into diagnostics has not yielded favorable results, and this funding will result in the dilution of the promoters’ shares. This serves as a lesson for many other startups, and the only positive aspect is that the company has managed to survive and hopefully will get a second chance to make history.

Disclaimer: This information is covered based on the latest research and development available. However, it may not fully reflect all current aspects of the subject matter.

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