PharmEasy raises ₹1,804 crore at a 90% valuation cut

The round happened at a 90% valuation cut compared to the startup’s peak valuation of  $5.6 billion in October 2021.

PharmEasy raises ₹1,804 crore at a 90% valuation cut
PharmEasy raises ₹1,804 crore at a 90% valuation cut

Mumbai-based online pharmacy startup PharmEasy has raised ₹1,804 crore ($216 million) in a down round led by the family office of Manipal Education and Medical Group (MEMG), chaired by Ranjan Pai, along with participation from other existing investors.

The round happened at a 90% valuation cut compared to the startup’s peak valuation of  $5.6 billion in October 2021. The funds were raised as part of the ongoing PharmEasy’s ₹3,500 crore rights issue after the Competition Commission of India (CCI) greenlit a month before.

As per regulatory filings, PharmEasy’s parent API Holdings passed special resolutions to allot 18.63 crore (18,63,74,897 to be precise) cumulative convertible preference shares B (CCPS B) at an issue price of ₹96.8 each. This translates into a cumulative total of ₹1,804 crore.

The participants in PharmEasy’s latest funding round included MEMG’s family office, which contributed ₹800 crore, while Prosus, Temasek, and 360 One Portfolios contributed ₹221 crore, ₹183 crore and ₹200 crore, respectively. 

Canadian pension fund CDPQ Private Equity also invested INR 95 Cr. Meanwhile, WSSS Investments, Goldman Sachs, and Evolution Debt Capital invested a total of ₹304 crores.

Last year, several media reports indicated that the company is looking to raise funds to pay its lender Goldman Sachs, who had lent about $285 million to the company to pay off an earlier debt taken during its ₹4,546 crore Thyrocare acquisition.

Since August 2023, the startup has actively sought to raise ₹3,500 crore to address its obligations, including repaying a debt to Goldman Sachs.

Last year too the firm saw its valuation shrinking several times. First, the firm’s valuation was reduced by around 50% by its investor Janus Henderson, a UK-based asset management company. This was followed by Neuberger Berman, a US-based independent investment also cutting PharmEasy’s valuation by 21.4% to $4.4 billion as of February 2023.

Pharmeasy joins the list of startups that have raised capital in downrounds over the last year, including unicorns such as Byju’s and Meesho.

Pharmeasy is also among a list of startups which postponed their IPO plan after filing draft papers with market regulator SEBI. The firm filed DRHP in November 2021 and pulled back its listing plan in August 2022 citing tough market conditions.

For the fiscal year ending in March 2023, PharmEasy saw a  16% growth in its revenue to ₹6,644 crore against ₹5,729 crore in FY22,  while it reduced its losses to ₹2,289.8 crore compared to ₹2,731.7 crore in FY22.