Pharmeasy discusses with PE firms to raise USD 250 Million debt
- ByStartupStory | May 2, 2022
API Holdings Ltd, the parent of Pharmeasy, is currently talks with certain private equity investors to raise approximately USD 250 million in debt in a bridge financing round as current market conditions are unfavourable for an IPO, said two people directly aware of the group’s plans .
API holdings had filed the draft prospectus in November 2021. “Pharmeasy has been engaged in talks with the credit arms of at least 2 American private equity firms. The transaction is expected to close soon. This is a bridge financing round to help the company fund its business till markets become more conducive to launch an IPO,” said the source on the request of anonymity as the talks are private.
The capital infusion in the form of funds will be utilised to repay certain loans, as well as for working capital requirements. Pharmeasy also plans to raise INR 6,250 crore through its IPO, of which INR 1,929 crore will be used for paying of outstanding debt.
“Our company and certain subsidiaries have entered financing arrangements for availing several credit facilities from banks and other financial institutions, including borrowings in the form of terms loans, fund-based and non-fund-based working capital facilities. As of 15 September, 2021, we had total outstanding borrowings of INR 2,494.73 crore on a consolidated basis. We intend to use an estimated INR 1,929 crore from the net proceeds towards repayment or prepayment of all or a portion of certain outstanding borrowings availed by our company and certain of our subsidiaries. This shall also include investments to be made by our company in certain subsidiaries who in turn shall use the funds for repayment or prepayment of all or a portion of their borrowings,” the draft prospectus said.
The document also indicates that the loans that have been earmarked for repayment in the prospectus have a repayment schedule in August 2022. Out of the Initial Public Offering proceeds, INR 1,500 crore will be used for funding inorganic growth and strategic initiatives and INR 1,259 crore for funding organic growth initiatives
“The current market volatility has severely impacted IPO launches for several companies, and IT companies have been hit on valuations. So companies that have near-term capital requirements are now evaluating a debt round to avoid diluting equity at softer valuations ahead of their Initial Public Offerings. These are very expensive loans, and can cost as much as 15 % in dollar terms, but can be of huge help for these companies in the current environment,” he added.
Pharmeasy is known for operating an integrated, end-to-end business, providing digital tools and information on wellness and illness, offering teleconsultation, radiology tests, diagnostics and delivering treatment protocols, including devices and medicines. Apart from Pharmeasy, API Holdings also runs these businesses through various brands, including Thyrocare Technologies,aknamed, docon, retailio.
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