Debt-Laden PharmEasy To Raise INR 2,000 Cr-INR 3,000 Cr Via Right Issue

SUMMARY

During an all-investor meeting on Monday, API Holdings decided to raise INR 2,000 Cr-INR 3,000 Cr via a rights issue

The PharmEasy parent has also approved a proposal by the Manipal Group to invest any shortfall amount if all investors do not end up participating in the rights issue

Manipal Group's family office has offered to invest up to INR 1,300 Cr in the epharmacy startup

API Holdings, the parent entity of debt-laden PharmEasy, reportedly decided to raise INR 2,000 Cr-INR 3,000 Cr via a rights issue, during an all-investor meeting held on Monday (July 17), to repay the loan it took from Goldman Sachs.

The company has also approved a proposal by the Manipal Group to invest any shortfall amount if all investors do not end up participating in the rights issue, CNBC TV18 reported citing sources.

Earlier this month, a report said that PharmEasy informed its board and investors about its plans to raise around INR 2,400 Cr through a rights issue, at a 90% discount, as the startup is in immediate need of money to pay off INR 2,280 Cr ($285 Mn) Term B loan, for which it had pledged shares of its subsidiary Thyrocare as collateral.

As per the latest report, Manipal Group’s family office has offered to invest up to INR 1,300 Cr in the epharmacy startup.

A section of investors at PharmEasy had reservations on the sale of shares to the Manipal Group at low valuations. As a solution, the board came to a consensus decision to give the first chance to its existing shareholders to invest on a pro-rata basis, the report said.

API Holdings’ board has reportedly approved Manipal Group’s binding offer but only to the tune of non-participation by the company’s existing shareholders.

PharmEasy is also backed by the likes of Prosus Ventures, TPG, and Temasek.

The post-money valuation of PharmEasy, after this investment, is expected to be to the tune of INR 6,000 Cr-INR 7,000 Cr (about $730 Mn-$850 Mn), a major drop from a valuation of $2.8 Bn during its previous fund raise.

Earlier, PharmEasy breached its loan covenant terms with Goldman Sachs, within a year after raising the high-cost debt.

As per the loan terms, the startup was expected to raise an equity round of around INR 1,000 Cr ($120 Mn) but failed to do so. The company had raised the debt to pay off a previous debt that it had taken to buy Thyrocare.

Amid a severe market downturn, PharmEasy also failed to launch its INR 6,250 Cr IPO, for which it had filed its DRHP in November 2021.