API Holdings, which runs omnichannel pharmacy chain Pharmeasy, and was struggling to raise capital, has raised Rs 3,500 crore ($420 million) through a rights issue, which has been oversubscribed, however, taking a cut in the valuation.
“We also launched a rights issue of Rs 3,500 crore and we are glad to announce that we are oversubscribed,” co-founder Dhaval Shah wrote in a LinkedIn post.
The issue put Pharmeasy at a pre-money valuation of around $500 million, making it one of the first major unicorns to take a cut in its valuation.
In 2021, when Pharmeasy last raised capital it was valued at about $5.6 billion. This was the startup’s second rights issue in about a year, which it primarily did to pay back a loan to Goldman Sachs.
“Every single shareholder stood up and supported us, believed in our vision and saw value in what the team at API is building,” Shah added.
Investors including Temasek Holdings, TPG, Prosus, CDPQ, Eight Roads, LGT, Abu Dhabi sovereign wealth fund ADQ, Amansa, OrbiMed and Sunil Kant Munjal’s family office had already committed to invest as much as Rs 2,000 crore. Manipal Health Enterprises founder Ranjan Pai’s family office was to invest Rs 1,200 crore.
Further, the company said it has achieved positive Ebitda of Rs 60 crore in the six months-ended September 2023. Ebitda stands for earnings before interest, taxes, depreciation, and amortization,
In April, Mint had reported the company’s plans to turn profitable by bringing down its monthly burn rate, after it failed to raise fresh capital in FY23, but due to poor market conditions.
“We decided in November 2022 that we should be profitable in April 2023,” Shah wrote. “For all months of H1 put together, we clocked a cumulative Rs 60 crore of Ebitda at API.”
The company reported consolidated net sales of Rs 5,728.8 crore in FY22, according to its regulatory filings with the registrar of companies. The losses in FY22 amounted to Rs 3,992.4 crore in FY22. However, the operational loss stood at around Rs 850 crore in FY22.
