Pharmeasy in talks with new investors for pre-IPO fund infusion

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Just before filing its draft prospectus for an Initial Public Offering (IPO), Pharmeasy’s parent company API Holdings has come near to closing a $300-million funding round. Hedge fund Steadview Capital, IIFL and a US- based hedge fund are reportedly in talks with the e-pharmacy to join the pre-IPO funding round, The Economic Times has reported.

Fresh fuel from investors

The pre-IPO funding will happen at a pre-money valuation of roughly $5.5 billion, while after the most recent round of funding, the company is expected to be valued at around $5.8 billion.

Pharmeasy was looking to raise nearly $200 million in primary capital from investors based in the US and Southeast Asia. Just before filing its draft prospectus, it is trying to finalise new deals with which it is likely to close the last round of funding, before going public sometime later this month.

With new investors coming in, the company has also finalised a secondary transaction of around $100 million, through which existing investors such as Nandan Nilekani’s Fundamentum, Eight Roads Ventures and Bessemer Venture Partners are expected to make a partial exit. In the secondary transaction, the existing investors sell all or some of their shares to fresh investors. However, the company only gets capital through primary funding – by issuing fresh shares, according to the report.

The e-pharma company, which after a number of acquisitions, such as diagnostic lab Thyrocare and cloud-based hospital supply chain management startup Aknamed, is up against the might of Tata-owned 1 mg and Reliance Industries-backed Netmeds.

Boom in e-pharma

Pharmeasy had finalised October as its deadline to file its IPO. According to the news report, the company was reportedly told that it could fetch a valuation of $9-10 billion, however it is likely to set its valuation at $7-8 billion so that there is an uptick in valuation after listing for investors.

Pharmeasy is raising fresh funds at a time when the market for teleconsultation has been growing, thanks partially to Covid restrictions. A recent report by Paxis Global Alliance pegged the teleconsultation market at around $163 million as of March. The market is estimated to grow to $800 million within the next three years. According to a 2020 report by Ernst & Young, within the next two years alone, the entire online pharmacy market in the country is estimated to grow to $2.7 billion.