PharmEasy’s parent company, API Holdings Ltd, has withdrawn the draft red herring prospectus (DRHP) it filed with the Securities and Exchange Board of India to float its initial public offering (IPO). The company had filed the DRHP on 9 November 2021.
PharmEasy deferred its IPO plans citing market conditions and strategic considerations, it said in a notice. The company is now instead planning to raise funds from existing shareholders via a rights issue.
The issue will comprise compulsory convertible preference shares expected to be priced around Rs 100 apiece. According to the notice, the company will open the rights issue for 30 days, starting around the first week of September 2022.
The company, which offers medicine deliveries and diagnostic test services, counts Prosus, TPG and Temasek as investors.
"Shareholders of the company will receive the letter of offer inviting them to participate in the rights issue on the terms which will be approved by the board," the company said in the notice.
In its DRHP, API Holdings had mentioned that the company was intending to raise Rs 6,250 crore via IPO. With the funds, the company was planning to majorly prepay or repay debt, fuel organic growth initiatives, and fund inorganic growth via acquisitions.
The company had hired Kotak Mahindra Capital Company Ltd, Morgan Stanley India Company Private Ltd, BoFA Securities India Limited, Citigroup Global Markets India Private Ltd, and JM Financial Ltd as bankers for its IPO.
Last month, Reuters, citing two people close to the matter, reported that the medical services startup was in talks with investors to raise $200 million in a down round valuing the company 15% or even 25% lower than last year's $5.1 billion.
The volatile domestic and international stock markets and growing investor scepticism about the high valuations of Indian startups have led to the fall in share prices of public Indian tech companies.
For instance, on 19 August, Paytm shares closed at Rs 771 apiece, down 64% from the IPO level of Rs 2,150. In the recently concluded annual general meeting, Paytm’s chief executive officer Vijay Shekhar Sharma told shareholders that his employee stock option plan grant will not vest until the price does not cross the IPO mark of Rs 2,150.
