PharmEasy plans to use about 31% of the IPO proceeds towards settling part of debt.
The healthtech unicorn said that out of the total IPO proceeds of INR 6,250, it will utilise INR 1,920 Cr towards “prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and certain of its subsidiaries.”
Out of the sanctioned credit of INR 2,629.6 Cr, the company has an outstanding debt of INR 2,494.7 Cr as of September 15.
The prepayment or repayment of its borrowings will include payment of principal amount, certain additional fees payable as indicated under the relevant facility agreements and the accrued interest thereon. It aims to complete the deployment of the outstanding loans by the next financial year (FY23).
This will help it reduce outstanding consolidated indebtedness, maintain a favourable debt-equity ratio on a consolidated basis and enable utilisation of the internal accruals of the company and its subsidiaries for further investment in business growth and expansion.
The debt repayment would include INR 733 Cr repayment by the subsidiary Threpsi Solutions Pvt Ltd. Other subsidiaries, Aycon Graph Connect, Ascent Wellness & Pharma Solutions and Medlife International, would repay debt worth INR 56 Cr, INR 684 Cr and INR 270 Cr, respectively.
Apart from debt repayment, PharmEasy will utilise INR 1,259 Cr to fund organic growth initiatives. It will further use INR 1,500 Cr for inorganic growth through acquisitions and other strategic initiatives.
Organic growth initiatives of the healthtech startup will include investment towards marketing and promotional activities, supply chain infrastructure and fulfilment along with technology infrastructure.
Its initiatives would include increasing the company’s holding in the subsidiaries, strategic investments, acquisitions.
It will also use some part of the proceeds for acquiring the remaining equity share capital of Akna Medical Private Limited which is expected to be completed by the Financial Year 2024. Towards this acquisition, PharmEasy will incur an outlay of up to INR 520 Cr.
In September, it had acquired a majority stake in healthcare supply chain startup Aknamed for INR 307 Cr.
The IPO-bound company has also proposed to deploy the net balance proceeds (not exceeding 25% of the proceeds) towards general corporate purposes such as the acquisition of fixed assets, working capital expenditure among other capital expenditure requirements.
The epharmacy platform filed its DRHP on Wednesday. Unlike other IPO-bound companies, the startup will be raising the entire offer amount through fresh issue of shares as its existing investors will not sell shares.
API Holdings, the parent company of PharmEasy, during the first quarter of the ongoing financial year (April-June) posted a loss of INR 313.8 Cr.
The startup’s total income or revenue soared to INR 1,207.2 Cr in three months of April, May and June of 2021. PharmEasy’s total expenses rose to INR 1,527 Cr during the same period.
Founded in 2015 by Dharmil Sheth and Dr Dhaval Shah, PharmEasy merged with its investor entity, Ascent Health, to form API Holdings in 2019. It brought in three new cofounders – Siddharth Shah, Hardik Dedhia, and Harsh Parekh.
To date, PharmEasy has raised close to $1 Bn in total funding across 10 rounds. The healthtech unicorn counts Tiger Global, Prosus Ventures, IIFL Finance, Temasek Holdings, and B Capital, as its investors. In October, it had scooped up $350 Mn in a primary as well as secondary round.