API Holdings Ltd., the parent company of India’s largest online pharmacy PharmEasy, has withdrawn its preliminary IPO application, citing market circumstances and strategic concerns.
According to an investor notice reviewed by Bloomberg News, the Mumbai-based business intends to seek capital through a rights offer for convertible preference shares. The price is planned to be 100 rupees ($1.25) per share, with the IPO scheduled to begin in the first week of September, according to the document.
PharmEasy’s spokesperson declined to comment on the withdrawal and rights problem.
PharmEasy’s ambitions to go public come after businesses like Zomato and Paytm failed to satisfy investors on their initial public offerings.
PharmEasy’s pre-IPO journey has not been without challenges. According to a February story in the Economic Times, its current shareholders are hesitant to sell their shares. Although, given the current market resistance to secondary offers, this may not be a terrible thing.
However, the firm’s response to the heightened degree of competition that has strengthened in both the now vital diagnostics industry and the drug sales business may be a greater challenge. Aside from Adar Poonawalla’s investments in Mylab Discovery, top corporate houses like as Tata (through 1mg), Reliance (via Netmeds), and even the Adani group have a stake in the sector.
With the IPO ambitions delayed for the time being, it will be fascinating to watch how and when PharmEasy will secure funds for the projects mentioned in its DRHP.
After raising the most capital in at least a decade in 2021, India’s IPO market has stalled this year. Just $5.2 billion has been raised in the nation so far this year, down 47% from the same period in 2021, according to Bloomberg figures.
According to the draught red herring prospectus it filed with the Securities and Exchange Board of India in November, PharmEasy offers a variety of services including digital tools and information on wellness, teleconsultations, diagnostic and radiological testing, and treatment delivery. TPG and Temasek Holdings Pte are among its investors.
Dharmil Sheth and Dhaval Shah founded the firm in Mumbai in 2015. The cofounders’ parents donated the initial startup financing. The business sought to exit the Mumbai market, but there were protests against epharmacies by 8.5 lakh pharmacists who closed their own pharmacies and took to the streets. Despite the protests, investors expressed interest and got Series A investment. PharmEasy merged with its parent firm, API Holding, in 2020. Thyrocare was reported to be acquired by the corporation in 2021.
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