API Holdings receives SEBI's nod to launch Rs 6,250 crore IPO

API Holding, the parent company of PharmEasy, is all set to launch its initial public offering (IPO) as the e-pharmacy player has received the nod from the Securities and Exchange Board of India (SEBI). Amid the rising volatility in the capital markets, the watchdog has flagged a go-ahead signal to the MedTech company to raise upto Rs 6,250 crore from its primary stake sale. However, there are several reports floating in the media suggesting that the company might delay its issue following the recent meltdown in the new age internet based companies which made their debut last year. API Holdings had filed its draft red herring prospectus (DRHP) with SEBI in November 2021, joining the peers like Zomato, Paytm, Nykaa, PolicyBazaar and CarTrade. PharmEasy's IPO will consist of only fresh equity shares aggregating to Rs 6,250 crore and none of the existing shareholders looking to offload its stake. The company, in consultation with book running lead managers (BRLMs), may also consider a private placement aggregating up to Rs 1,250 crore. If such placement is completed, the fresh issue size will be reduced, DRHP said. Prior to filing the DRHP for IPO, Pharmeasy raised $350 million from investors in pre-IPO round at a valuation of $5.6 billion in October. THe company raised about $1 billion in 2021. The company will use Rs 1,929 crore of the net IPO proceeds to repay or prepay borrowings and Rs 1,259 crore to fund organic growth initiatives, whereas Rs 1,500 crore will be allocated for inorganic growth opportunities. In 2021, Mumbai headquartered API holdings acquired the listing diagnostics player Thyrocare Technologies. It focuses on end-to-end business to provide solutions for all healthcare needs. PharmEasy entered the unicorn club at a valuation of $1.5 billion in April when Prosus Ventures, TPG and others led a $350-million funding round. Its valuation had jumped to a little over $4 billion after the Thyrocare deal. The company provides consumers with digital tools and information on illness and wellness, offering teleconsultation, offering diagnostics and radiology tests, and delivering treatment protocols including products and devices. Among the key investors of API Holdings, Naspers (12.04 percent) and Temasek Holdings (10.84 percent) hold double digit stakes in the company. Other shareholders for the company indclue TPG Growth, CDPQ, Bessemer, B Capital. Amansa Capital, Blackstone-backed hedge fund ApaH Capital, US hedge fund Janus Henderson, OrbiMed, Steadview Capital, Abu Dhabi’s sovereign wealth fund ADQ, hedge fund Neuberger Berman and London’s Sanne Group participated in the latest fund raising round. According to a RedSeer Report, stated in DRHP, API Holdings is India’s largest digital healthcare platform based on gross merchant value (GMV) of products and services sold for the year ended March 31, 2021. PharmEasy has half the share in online pharmacy gross merchandise value, compared with 16 per cent for Tata-owned 1mg and 15per cent for Reliance Industries' Netmeds. In FY20, PharmEasy doubled its revenue to Rs 637 crore. For the financial year 2021, API Holdings’ total income jumped more than threefold to Rs 2,360 crore from Rs 737 crore the previous year. Its losses widened 90 per cent to Rs 641 crore. In the three months ended June 2021, it clocked income of Rs 1,207 crore with a loss of Rs 314 crore, the DRHP showed. Citigroup Global Markets India, JM Financial Ltd, Kotak Mahindra Capital, Morgan Stanley India and BoFA Securities India have been appointed as the BRLMs to the issue, whereas Link Intime India is the registrar to the issue.