API Holdings Ltd, the parent company of online pharmacy platform PharmEasy, has raised an undisclosed amount in debt from growth-stage financing platform EvolutionX Debt Capital.
The development comes nearly three months after the e-pharmacy company withdrew its initial public offering (IPO) papers with the Securities and Exchange Board of India (Sebi) in August.
PharmEasy deferred its IPO plans citing market conditions and strategic considerations. At that time, the company had said that it would instead raise funds from existing shareholders via a rights issue.
The firm was aiming to raise Rs 6,250 crore via its IPO. With the capital, it was planning to majorly prepay or repay debt, fuel organic growth initiatives and fund inorganic growth via acquisitions.
“This is part of a sequence of planned capital raises, to be followed by equity infusion in the company in the near term. This collective capital raise will optimize the capital structure as well as improve the net debt position and financial strength of the company, ensuring a clear runway to profitability,” said Siddharth Shah, co-founder and chief executive, API Holdings.
PharmEasy was founded in 2015 by Dharmil Sheth and Dhaval Shah as a subsidiary of Ascent Health. Besides the delivery of medicines, the company offers diagnostic tests to customers.
The company works closely with pharmaceutical companies, wholesalers, pharmacies, hospitals, doctors and clinics and diagnostic labs through a connected ecosystem with a nationwide presence. It claims to have more than 6 million transacting users, over 150,000 active pharmacies and about 1,800 hospitals. It counts Prosus TPG and Temasek as investors.
The deal marks the maiden investment of EvolutionX Debt Capital, which was jointly set up by Singaporean multinational banking and financial services corporation DBS Bank and Singaporean state holding company Temasek in late 2021.
Leveraging Temasek’s investment expertise and DBS’ global banking networks, EvolutionX aims to provide an alternative source of debt financing to enable growth-stage technology companies to scale faster and expand into new markets.
“As capital markets continue to be muted and access to private capital narrows for tech start-ups, founders and their shareholders are increasingly seeking less dilutive forms of capital to extend their cash runway and avoid raising equity capital at lower valuations. EvolutionX’s philosophy centres on investing in category-leading technology companies led by promising founders and backed by reputed investors,” said Rahul Shah, partner and co-head leading investments across India and Southeast Asia for EvolutionX.