API Holdings Ltd, the parent of India’s largest online pharmacy chain Pharmeasy, is looking to shake up India’s booming e-pharmacy market and launch a blockbuster initial public offering (IPO) in FY22 to raise up to $1.2 billion, people familiar with the matter told Moneycontrol.
The healthcare firm, which recently acquired smaller rival Medlife, and is backed by marque investors like Prosus Ventures (previously Naspers Ventures), TPG Growth and Temasek, has picked two i-banks for now and is targeting a valuation of around $4 billion for the proposed India listing, these persons said.
“Pharmeasy has shortlisted investment banks Morgan Stanley and Kotak Mahindra Capital as advisors earlier this week. More i-banks may come on board at a later stage,” said one of the persons cited above.
A second person said the company is targeting an additional private round of fund-raising in the coming months to beef up valuations. "A lion’s share of the IPO will be a primary issuance of shares for growth capital as it looks to partner with more pharmacies. It will also facilitate a partial exit for the firm’s investors.”
Prosus, TPG and Temasek hold around 30 percent stake in Pharmeasy. Other investors include CDPQ, LGT Rightrocks, Eight Roads and Think Investments.
“ These are still early days, but as of now the plan is to file the DRHP(draft red herring prospectus) with Sebi in August or September post the additional round of fund raising. A launch could be possible between January and March 2022, “ a third individual told Moneycontrol.
A fourth individual confirmed the tentative timelines for the listing and said Pharmeasy was earlier exploring the idea of a SPAC (special purposed acquisition vehicle) listing overseas but later opted for an India IPO.
All the four persons spoke to Moneycontrol on the condition of anonymity.
Moneycontrol is awaiting an email response from Pharmeasy, its co-founders, Kotak Mahindra Bank and Morgan Stanley and has sent reminders. This article will be updated as soon as we hear from them.
THE PHARMACY EXPLOSION IN INDIA
In the last year, India has witnessed a surge in demand for COVID-19 related products, medicines and supplements which has benefited pharmacy players, especially those with online offerings.
A week earlier, Moneycontrol was the first to report that Warburg Pincus and PremjiInvest backed Medplus, India’s second largest retail pharmacy chain by value, had picked i-bankers for an IPO to raise around Rs 2,000 crore.
To be sure, Pharmeasy and Medplus are not the only players in the pharmacy segment planning a D-Street debut. On April 26th, 2021, Mint reported that Poonawalla family-backed Wellness Forever was eyeing an IPO.
Other significant players in the domestic retail pharmacy segment (online and offline) included Chennai-based Netmeds (acquired by Reliance Industries) , 1mg (acquired by the Tata Group). Amazon (launched Amazon Pharmacy last year in Bengaluru) and Apollo Pharmacy.
THE PHARMEASY STORY
According to its Linkedin page, Pharmeasy delivers medicines and healthcare products in 1,000+ cities in India, covering 22,000+ pin codes. It offers diagnostic test services across Mumbai including Thane, Navi Mumbai, Kalyan & Dombivali, Delhi with Noida, Gurgaon, Faridabad & Ghaziabad, Chennai, Pune, Ahmedabad, and Gandhi Nagar, Surat, Vadodara, Lucknow, Kolkata, Hyderabad, Bengaluru, and Jaipur.
On April 7, 2021 , Moneycontrol reported that Pharmeasy parent API Holdings had raised $350 million at a valuation of $1.5 billion.Also Read: PharmEasy parent API Holdings raises $350 million at $1.5 billion valuation, enters unicorn club
Announcing the Medlife buyout, the online healthcare aggregator’s Co-Founder Dr Dhaval Shah said in a Linkedin post earlier this week:
“We started with the sole purpose of making affordable healthcare accessible to all in 2015, PharmEasy has now covered every single pin code across the country. With this, we aim to reach even more people pan India and cater to their healthcare needs.
While we love the Medlife brand - we believe that a singular focus on our consumer needs through a single platform ‘Pharmeasy’ will help us solve for consumer needs much better. This also makes us the largest healthcare delivery platform across the country by a distance - serving more than 2mn families every single month.”
Shah founded the firm in 2015 with co-founder Dharmil Sheth.
The Indian retail pharmacy segment is estimated to be worth $18 billion and is expected to touch $50 billion by 2025, data from the Department of Industrial Policy and Promotion revealed.Disclosure: Reliance Industries Ltd, which owns Jio, is the sole beneficiary of Independent Media Trust that controls Network18 Media & Investments Ltd.