API Holdings (PharmEasy) IPO - 7 Things to Know

Over the last few months, a number of extremely popular digital brands have hit the market and these include Zomato, Paytm, Nykaa and Policybazaar. One more such unicorn to tap the IPO market is API Holding Ltd. While the name of the parent company may not be well known, its online brand, PharmEasy, is one of the most popular retail brands.
 

Seven things to know about the API Holdings (PharmEasy) IPO

1. PharmEasy has already filed its draft red herring prospectus with SEBI for its proposed Rs.6,250 crore IPO. The entire issue will be by way of fresh issue and the promoters or the early investors do not intent to dilute their existing holdings, although their stake would reduce overall due expansion of the capital base.

2. As one of India’s leading digital pharmaceutical platforms, API Holdings (PharmEasy) has marquee investors on its roster including Prosus Ventures, TPG Growth, Temasek, CPDQ, LGT Lightrock, Eight Roads and Think Investments. Existing shareholders are not reducing their holdings at this point of time.

3. Out of the fresh issue of Rs.6,250 crore proposed to be raised in the IPO, API Holdings (PharmEasy) would look to raise around Rs.1,250 crore via private placement as part of its pre-IPO fund raising.

Check - PharmEasy parent API Files for DRHP for IPO

If that round is successful, the final size of the IPO would be reduced to that extent. This would be done post the SEBI approval and before RHP filing.

4. API Holdings (PharmEasy) has identified the applications of its fresh funds. It will use Rs.1,930 crore for reducing its current debt. In addition, the company will use Rs.1,260 crore to fund organic expansions and another Rs.1,500 crore to fund its inorganic expansions via niche mergers and acquisitions as opportunities arise.

5. Interestingly, API Holdings (PharmEasy) has seen its revenues grow exponentially on YoY basis. Between FY20 and FY21, total revenues of PharmEasy grew 3.5 times to Rs.2,335 crore.

The company has already reported revenues of Rs.1,197 crore in the Jun-21 quarter, so FY22 promises to be another year of heady growth in the top line.

6. API Holdings (PharmEasy) reported net loss of Rs.645 crore in FY21, nearly twice the losses in the previous year. It has already reported Rs.335 crore loss in Q1 so FY22 promises wider losses.

However, what matters in this business is the gross merchandise value (GMV), which has grown 2.5 times at Rs.787 crore in FY21.

7. The issue will be lead managed by Kotak Mahindra Capital, Morgan Stanley, BOFA Securities, Citigroup Global and JM Financial who will joint act as the book running lead managers to the issue.

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