PharmEasy bags Rs 1.3K cr from Pai; Rs 3.5K cr rights issue oversubscribed

Ranjan Pai, chairman of Manipal Education and Medical Group, has pledged an investment of Rs 1,300 crore in the PharmEasy rights issue. This commitment was made through his family office, according to sources familiar with the matter.

This investment by Pai is part of a larger Rs 3,500 crore fundraising effort by the e-pharmacy company through the rights issue. The issue was oversubscribed at Rs 3,950 crore, but the company is only raising Rs 3,500 crore.
 

Besides Pai’s commitment, PharmEasy raised the remaining Rs 2,200 crore from existing shareholders. Pai declined to comment when approached.

With this investment, the head of the Manipal group has become the largest shareholder in the firm, holding an estimated 13-14 per cent stake. The second largest shareholder will be the institutional investor, Prosus.

The precise shareholding structure of API Holdings, PharmEasy's parent company, remains unclear until the funds are received. Pai’s shareholding has been acquired from shareholders and employees.

“We raised Rs 3,500 crore and there was more demand, which we had to politely reject. Every single shareholder supported us, believed in our vision, and saw value in what the team at API is building,” said Dhaval Shah, co-founder, PharmEasy.

The sources said that Pai is set to join the board of API Holdings, and currently, he has no immediate plans to increase his stake in the company.

This fundraising is also happening at the lowest level of markdown, according to people in the know. Business Standard could not independently verify the valuations. API Holdings was valued at $8.45 billion in post-money valuation in 2022, according to data from Tracxn.

A portion of the funds raised will be used to reduce its debt. PharmEasy has a total debt of $300 million from Goldman Sachs, part of which is due for payment soon.

PharmEasy, according to Shah, turned profitable for the first half of 2023-24. “For all months of H1 put together (the first six months April to September 2023), we clocked a cumulative Rs 60 crore of Ebitda (earnings before interest, taxes, depreciation, and amortisation) at API,” Shah noted in a LinkedIn post.

In a recent analyst call, Prosus portrayed PharmEasy as an underperformer for the fund house, but it stated that it continues to believe in the business.

While discussing the write-down for the first half of FY24, Basil Sgourdos, group CFO and executive director, said: "…Another is a write-down in PharmEasy of about $118 million and that's really driven by the need for PharmEasy to raise money to settle debt. We actually participated in that round which expresses our confidence in the business going forward. We own 13 per cent of PharmEasy. We haven’t disclosed the full value of the company.”