INDIA –PharmEasy, India’s drug and medical services start-up is in talks with investors to raise US$200 million, news agency Reuters reported citing two sources.
According to the report, the sources told Reuters that PharmEasy is eyeing a valuation that could be 15 percent or even 25 percent lower than last year’s US$5.1 billion.
One source said PharmEasy, backed by big-name investors such as Prosus, TPG and Temasek, is in discussion to secure the new funds at a valuation as much as 15 percent below last year’s.
The second source said the company, which offers online medicine deliveries and diagnostic test services, has told its bankers to consider even a 25 percent reduction if needed to close the deal.
That could cut PharmEasy’s valuation for the new funding round to US$3.8 billion, and the sources said an initial public offering (IPO) first targeted for 2022 has been delayed.
Start-ups in India have been jolted by uncertain global and domestic stock markets, and growing investor skepticism over what they say are sky-high valuations, making it difficult for PharmEasy to raise funds at same or a higher valuation, the sources said.
They declined to be named as the talks on raising funds were private.
In recent years, PharmEasy’s valuation has risen amid a boom in startups in India as a whole and sharp growth in its industry, whose competitors include Reliance’s Netmeds, Tata’s 1mg and Walmart’s Flipkart.
PharmEasy’s planned fundraising is set to see participation from some existing investors, who have indicated they will commit about US$115 million in the new round, said the first source involved in the talks.
API Holdings, PharmEasy’s parent firm which is looking to raise the funds, declined to comment. API owns other businesses, including diagnostic test provider Thyrocare.
Last year, Indian start-ups raised a record US$35 billion in private funding and many internet companies went public.
PharmEasy, too, cashed in on the boom raised a total of US$1.89 billion since 2015, with most of it coming in the last two years, data from Pitchbook shows.
In recent years, the company’s valuation has risen amid a boom in startups in India as a whole and sharp growth in its industry, whose competitors include Reliance’s Netmeds, Tata’s 1mg and Walmart’s Flipkart.
First company in India to sell shares at lower prices
PharmEasy’s “down round” deal, in which the company sells shares at a lower price than before, will be the first by a leading Indian company in recent times.
Parent PharmEasy saw its total revenue more than double to US$714 million in the fiscal year ending March 2022.
But total expenses for the period came in at US$1.06 billion, partly due to one-time expenses on employee stock, according to a Reuters filing that included PharmEasy’s latest unaudited financial results.
Net loss for the year quadrupled to US$334 million, according to the filing.
According to the first source, PharmEasy is now in a “wait and watch” position and is considering going public next year.
A second source with knowledge of the situation added that the IPO may not happen before the end of 2023 and that PharmEasy’s parent company may have to resubmit regulatory IPO filings.
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