Goldman Sachs is in advanced talks to invest about $350 million (Rs 2,700 crore) in API Holdings Ltd, the parent of online pharmacy PharmEasy, in a structured debt transaction, people in the know said.
The debt will carry an interest rate of 14-15% and also have a pre-agreed equity upside, or a premium to the rate based on potential increase in the company’s valuation, the people said. The money will predominantly be used to refinance the debt the company had taken to fund its acquisition of diagnostics chain Thyrocare last year.
Goldman Sachs declined to comment while an email sent to API Holdings remained unanswered at press time Tuesday.
The company may raise another $200 million after closing the deal with the US financial services company, the people said.
PharmEasy, India’s largest online pharmacy, had plans to raise Rs6,250 crore through an initial public offering of shares and use Rs1,929 crore of that for paying off debt. A part of the debt payment is due by August 2022. The IPO plans were kept on hold due to weak market conditions.
PharmEasy was valued at $5.6 billion when a clutch of global funds invested $350 million in a pre-IPO round in October last year. Singapore-based Amansa Capital, hedge fund ApaH Capital, OrbiMed, Steadview Capital and Abu Dhabi’s sovereign wealth fund ADQ were among PharmEasy’s new investors.
PharmEasy turned a unicorn in April 2021, when Prosus Ventures, TPG and others led a $350 million Series-E round of funding at a valuation of 1.5 billion. After it acquired a 66% stake in Thyrocare in June 2021, the valuation shot up to $4 billion.
Prosus Ventures (previously Naspers Ventures) is the largest shareholder in the startup with a 12% stake. Singapore-based Temasek holds a 11% stake in the company, while TPG Growth owns 6.6% and Evermed Holdings has a 6% stake. As many as 43 investors hold about 70% of the company.
Founded by Dhaval Shah and Dharmil Sheth in 2015, Mumbai-based PharmEasy claimed that it had 25 million registered users as of June 30, 2021. According to the company, it had 2.4 million transacting customers and processed 8.8 million orders in fiscal 2021.
PharmEasy accounts for half the gross value of transactions in India’s online pharmacy segment, compared with 16% by 1mg and 15% by Netmeds.
After the Covid pandemic, the country has seen a marked shift by customers from physical stores to online pharmacies. Hence, more players have joined the space to tap the potential market. Recently, Flipkart too entered the online pharmacy space with Health+, joining the likes of Amazon Pharmacy, Reliance Industries’ NetMeds, Tata Group’s 1mg, Mfine and MeddyBuddy.
Conglomerates like Tata and Reliance entered the space recently through buyouts. Tata Digital acquired 1mg last year, while Reliance Retail acquired a majority stake in Chennai-based platform Netmeds in 2020.
The e-pharmacy market was valued at $345 million in 2021, growing at 21.28% compound annual rate during 2021-2027, according to the latest KPMG-Ficci study. In India, there is still a lot of scope for Internet penetration. As a result, e-pharmacies would continue to grow, said the report.