IPO Alert: API Holdings files DRHP with SEBI for public issue

Healthcare spending in India grew at a healthy compound annual rate of 13% from 2015 to 2019 and reached around ₹9.6 trillion.

At 9%, the market saw a slower growth in 2020 when total spending rose to just ₹10.4 trillion, owing to the drop in non-critical healthcare spending. The growth largely came from increased spending on COVID-related products and services. The government is planning to increase overall healthcare spending from 1.2% of GDP in 2019 to 2.5-3% by 2025.

API Holdings, the parent of online pharmacy PharmEasy, recently filed a draft red herring prospectus with market regulator SEBI for a ₹6,250-crore initial public offering. The offering involves the fresh issue of shares.

According to sources, the company is also planning to raise ₹1,250 crores via a pre-IPO private placement. In that case, the size of the public issue will be altered accordingly.

PharmEasy intends to utilize an estimated ₹1,929 crores from the net proceeds towards prepayment or repayment of all of its outstanding borrowings. The company would employ ₹1,259 crores for funding business expansion through organic growth initiatives, including investment in its subsidiaries.

The company would use ₹1,500 crores towards funding inorganic growth initiatives such as increasing its holdings in subsidiaries, strategic investments, or acquisitions. The remaining funds will be used for general corporate purposes.

Company Overview

PharmEasy is one of the largest healthcare platforms in India — an integrated end-to-end business that aims to offer solutions for providing digital tools and information on illness and wellness. Its other offerings include teleconsultation, diagnostics/radiology tests, and treatment protocols including products and devices.

PharmEasy has custom-built proprietary technology, unified data platforms, supply chain capabilities, and a deep understanding of the dynamic interplay between the various sub-segments of the country’s healthcare market.

The Mumbai-based company can deliver 18,587 pin codes via the PharmEasy marketplace across India. It acquired Thyrocare in September 2021, which is a key player in diagnostics.

PharmEasy’s main competitors are Tata-owned 1mg and Reliance Industries’ Netmeds, which follow the same business model for healthcare distribution.

Key Figures

In fiscal 2021, API Holdings’ total revenue surged to ₹2,360 crores from ₹737 crores in the previous year, but its net loss widened to ₹641 crores. PharmEasy relies heavily on its arrangement with third-party service providers to source samples and to sell pathology testing services.