Pharmeasy Plans to Raise ₹2,500 Crore to Repay Senior Debt

• ByStartupStory     |    July 5, 2023

Pharmeasy, the omnichannel pharmacy chain, has announced plans to raise ₹2,500 crore to repay the senior debt it had previously raised from Goldman Sachs. According to sources familiar with the matter, the Manipal Group’s Ranjan Pai’s family office will contribute ₹1,000 crore, while the remaining funds will be provided by existing investors in Pharmeasy.

The company’s investors include Prosus, Temasek, B Capital, Tiger Global, Orios, Kotak PE, among others. Pharmeasy’s current valuation stands at $500-600 million, representing a significant decline from its previous valuation of $5.6 billion during its last round of primary capital fundraising in 2021.

The capital infusion will occur through a rights issue, enabling the company to secure fresh funding. This marks the second rights issue in less than a year, following an invitation to existing investors in October 2022 to subscribe to up to ₹750 crore through convertible notes.

Regarding the recent funding developments, one source stated, “(Ranjan) Pai’s family office has given a term sheet of ₹1,000 crore, and the company is raising another ₹1,000 crore from its existing investors.” Additionally, discussions are underway with another private equity firm to secure an additional ₹300 crore.

Pharmeasy faces a structured loan of ₹2,280 crore from Goldman Sachs, which is due in 2026 and requires quarterly interest payments of ₹25 crore. The loan also includes a payment-in-kind (PIK) component, ranging from 7.25% to 8.25%, scheduled for payment in 2026. A PIK component allows for a delay in payment or payment through alternative means, including securities.

Pharmeasy had previously attempted to raise fresh capital in FY23 but had to postpone the plans due to unfavourable market conditions. The company’s spokesperson declined to comment on the recent developments, and the founders were not immediately available for comment.

Recent reports indicate that Pharmeasy has made significant progress in reducing its monthly burn rate, aiming to achieve profitability. The company’s operational cash flow turned positive in April, indicating that cost-cutting efforts are yielding results. The monthly operational loss decreased from ₹86 crore in March 2022 to approximately ₹5.6 crore in March 2023.

Pharmeasy’s turnaround can be attributed to the integration of the diagnostics business on its platform and the benefits of cross-selling opportunities. In June 2021, the parent company of Pharmeasy, API Holdings, acquired a 66% stake in Thyrocare for ₹4,546 crore. According to regulatory filings with the registrar of companies, Pharmeasy reported consolidated net sales of ₹5,728.8 crore in FY22, with losses amounting to ₹3,992.4 crore. However, the operational loss for FY22 was around ₹850 crore.

The latest capital injection from Manipal Group and existing investors will help Pharmeasy retire its debt and strengthen its financial position as it continues its growth trajectory in the competitive e-pharmacy space.

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