Valuation Markdown: Now Pine Labs, PharmEasy Face The Burn

Valuation markdown is the new flavour of the season at the Indian startup ecosystem. When layoffs, and funding crunch have been haunting the startups, valuation markdown by their respective investors has now added to their woes.

Latest is, Neuberger Berman, a New York-based investment firm, has marked down the valuations of two of its major Indian portfolio companies: PharmEasy and Pine Labs.

Fintech giant Pine Labs has faced a 38% cut, while epharmacy unicorn PharmEasy saw a 21% valuation markdown. 

This means, Pine Labs’ valuation has been put to $3.1 Bn compared to $5 Bn in July 2021, when the startup had last raised funds. 

Similarly, the NY-based investment firm has reduced the valuation of API Holdings, the parent company of PharmEasy, to $4.4 Bn from $5.6 Bn it had achieved in October of 2021. 

It is worth noting that both the unicorns had initiated their IPO processings, with PharmEasy even filing its draft red herring prospectus (DRHP) for a public offer worth INR 6,250 Cr with SEBI. 

However, earlier this month, Pine Labs halted its IPO plans, citing ‘weak market sentiments’. So, as it stands, both the startups have now shelved their IPO plans for sometime, citing market volatility. In late October of last year, PharmEasy, despite its heavy loss, secured a funding of INR 750 Cr from its existing investors through convertible notes. 

Interestingly, Neuberger Berman further mentioned that it will continue to slash the valuation of its major Indian portfolio companies to fund a variety of purchases across geographies. 

Just yesterday, US-based investment firm Vanguard Group markdowned ride-hailing startup Ola  for the third time by 35% from $7.4 Bn to $4.8 Bn. Earlier, it had cut the ride-hailing startup’s valuation by 45% in 2020 and by another 9.5% in 2021.

Earlier this week, US-based VC firm Invesco slashed the foodtech giant Swiggy’s valuation from $10.7 Bn to $5.5 Bn. It is worth noting that Invesco, which has also invested in Pine Labs, has kept the fintech unicorn’s valuation unchanged. 

In another instance, in April, BlackRock had cut BYJU’S valuation by 50% to $11.5 Bn and Japan’s SoftBank marked down OYO’s valuation by over 20%. 

As the economic slowdown persists, it is expected that an increasing number of startups with inflated valuations will undergo a correction in their valuation in the days to come. 

The development of Neuberger Berman marking down the valuations of PharmEasy and Pine Labs was first reported by ET.