PharmEasy Rights Issue: Goldman Sachs, Prosus, Temasek Get CCI Nod To Acquire Stake

Close on the heels of PharmEasy’s ‘oversubscribed’ rights issue, the Competition Commission of India (CCI) on Monday (January 30) greenlit the proposal of the investors to increase their stakes in the digital pharmacy.

In October last year, the healthtech unicorn said it concluded an INR 3,500 Cr rights issue. Prior reports suggested that the issue saw participation from Singapore’s sovereign wealth fund Temasek, CDPQ (Canadian pension fund), among others.

In back-to-back orders, the competition watchdog approved the subscription of PharmEasy’s compulsorily convertible preference shares (CCPS) by Goldman Sachs India (through two separate funds), MacRitchie Investments and EvolutionX (both owned by Temasek), and CDPQ. 

The CCI also gave its approval to Dutch investor Prosus’ proposal to acquire additional shares of API Holdings, PharmEasy’s parent. While greenlighting the petitions, the Commission noted that the transactions ‘did not give rise to any competition concerns’.

“The target proposes to raise capital through issuance of CCPS B by way of a rights issue. The Acquirer (CDPQ) is an existing investor in the target (PharmEasy) and is a preemption right holder under the existing SHA… The proposed transaction will result in the Acquirer continuing to hold approximately the same shareholding in the Target,” the CCI said in its order about CDPQ acquiring an additional stake.

This comes three months after the unicorn said it concluded its rights issue, without disclosing the name of the investors.

PharmEasy went for the rights issue amid a looming debt crisis which erupted last year. The startup plans to use the funds raised via the rights issue to service a significant portion of its outstanding debt to Goldman Sachs.

The startup violated its loan covenant conditions with Goldman Sachs barely a year after raising the debt. As per the terms of the loan, PharmEasy was supposed to raise an equity round of about INR 1,000 Cr, which failed to materialise amid its company’s mounting losses and the ongoing funding winter. 

Founded in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy is an online marketplace for medicines. It also sells diagnostic tests to its customers through its subsidiaries and brands under its umbrella.

PharmEasy clocked a 16% YoY growth in operating revenue to INR 6,644 Cr in FY23 as against a loss of INR 2,289.8 Cr during the period under review, down 16.2% YoY. 

PharmEasy has also been grappling with valuation markdowns by its key investors such as Janus Henderson and Neuberger Berman. In a bid to streamline operations, the startup also undertook multiple rounds of layoffs and fired more than 500 employees since 2022.