PharmEasy valued at $1.8 billion as B Capital buys stake for $20 million


Facebook cofounder Eduardo Saverin’s B Capital has picked up a minority stake in online pharmacy PharmEasy for $20 million through a secondary deal, sources aware of the matter said.

This comes just days after the Tatas
acquired a majority stake in rival e-pharmacy 1mg.

US-based investment firm Tiger Global is also finalising a $20 million primary capital infusion in PharmEasy’s parent API Holdings.

PharmEasy is now valued at $1.8 billion, up from $1.5 billion in April, joining India’s fast-growing pool of unicorns — or those startups valued at $1 billion or more.

ET was the
first to report about the transaction on May 29.

“B Capital transaction is complete after Everstone Capital exited partially. For Tiger Global, only some paperwork is getting finished and should be complete soon,” a source aware of the matter said.

B Capital bought the shares from Everstone Capital, which sold a part of its holding in the e-pharmacy company, ET had reported.

B Capital, which has invested in startups like Byju’s, Bounce and Khatabook, is learnt to have picked around 2%.

PharmaEasy cofounder Dhaval Shah declined to comment on B Capital picking up a stake in the company.

B Capital and Everstone Capital did not respond to ET’s emails till press time Wednesday.

Meanwhile, the company is also conducting a $3 million buyback of employee stock ownership plans (Esops), in what would be its second such move in about three months.

Shah told ET that the company has now conducted Esop buybacks worth $8 million in total over the last three months.

“We are conducting this buyback to reward our staff in these times when liquidity can help them. Our previous Esop buyback was about $5 million a few months ago. In total, we have done $13 million of Esop buybacks. The latest tranche of share purchase has been done by existing shareholders,” Shah said.

See also  Colombia awards three operators bandwidth in $1.5 billion auction

In a secondary transaction, capital from a new investor goes to an existing investor and not to the company coffers.

Over the past few months, startups like PhonePe, Razorpay and others have done
Esop buybacks.

In April, Prosus Ventures (formerly Naspers) and US-based private equity major TPG
invested $350 million in the startup, which competes against Tata-owned 1 mg, Reliance Industries-owned Netmeds, besides Amazon which has started medicine delivery in Bengaluru.

Earlier this year, PharmEasy
closed the acquisition of smaller rival Medlife, emerging as the largest online platform in the space. It is said to be clocking monthly revenue of Rs 300 crore, aided by the Medlife acquisition.

Going forward, it would be interesting to see how PharmEasy maintains its pole position in the market as it gears up for a battle with the Tatas and RIL. To be sure, investors like Prosus and Tiger Global back startups with long-term plans as well but conglomerates like the Tata group or RIL also have deep pockets. In fact, this was one of the reasons that 1mg eventually chose to go with the Tatas even as it was lining up $100-$150 million in funding from private equity investors.

For now, PharmEasy’s IPO plans remain unchanged and is in talks with bankers.

Food tech platform Zomato filed its draft red herring prospectus with India’s markets regulator in April, proposing an offering of Rs 8,250 crore.

ET had
reported that PharmEasy was eyeing an IPO at a valuation of $3 billion.

The seven-year-old startup is now looking to scale up its operations and widen its reach in the country. It plans to expand its base of pharmacies to 120,000 in the next year, up from around 80,000 currently. Over the next two years, it plans to have a network of over 200,000 such pharmacies servicing orders across 100 cities in India.

See also  S.Korea's Samsung Elec closes mobile device plant after coronavirus case confirmed -Yonhap

The e-pharma sector is among those to benefit from increased adoption of digital commerce during the pandemic. Industry reports estimate that about six million new households have tried online purchase of medicines in the past year, taking the total user base to about nine million.

Typically, e-pharmacies derive the bulk of their revenue from selling prescription medicines to chronic patients but are now expanding by offering services such as online doctor consultations and diagnostic services.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here