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API Holdings, the parent company of online pharmacy Pharmeasy, has started exploratory talks for a possible public market listing, with a target valuation of Rs. 3,000-Rs 3,700 crores ($400-$500 million), according to multiple sources familiar with the matter.
Both the primary and secondary components are included as per the share sale proposal, which comes amid increased investor interest in the pharma sector and e-commerce space followed by the Covid-19 pandemic
According to the people, in the initial days, the company will be valued at around Rs 21,800 crores ($3 billion).
About dozens of investment banks were pitched for the IPO mandate of the company, situated in Mumbai. Also, investors have laid their eyes on the listing waiting for the end of the year or early next year as per the source.
Last month’s top three, Prosus Venture and TPG held the minority stakes in the e-pharmacy and these firms hold a stake of 30% alone. And other investment firms such as TPG Growth, Prosus Ventures, Temasek, CDPQ, LGT Lightrock, Eight Roads and Think investments own about 80% of the stake in API holdings.
Founder of Pharmeasy, Dhaval Shah, a TPG spokesperson hasn’t made any comments yet.
No response was given from Temasek, CDPQ, Naspers, and Eight Roads to the emails till the press time on Tuesday.
Last week, drugstore chain Medplus recruited bankers to pursue a Rs 2,000-crore IPO at a valuation of Rs 7,200 crore ($1 billion), backed by private equity firm Warburg Pincus.
Acquires rival Medlife
On the other hand, the company( Pharmeasy) announced on Tuesday that it has acquired rival Medlife as the largest consolidation deal in India’s fast-growing pharma sector.
Pharmeasy posted a Blog saying that, From Tuesday, Medlife and its customers and retail partners will be integrated, and the latter’s customers and retail partners will be moved to its own platform.
ET submitted its first proposal report to the competition commission of India for acquiring Medlife, back in August last year.
Medlife shareholders obtained a 19.59% ownership in API holdings valued at around $240 million at the time of the deal’s conclusion.
Pharmeasy made around $ 1.5 million and became the first online pharmacy in India to become a Unicorn- or startup with a valuation of $1 billion or more. Adding more to it, last month’s series and round led by Prosus Ventures and US-based private equity firm TPG Growth made a growth rate of around $350 million in the API holdings.
Drugmaker Alkem Laboratories Ltd, one of its founders Prabhat Narain Singh having the largest share in Medlife and also has a seat on the board of API holdings.
“This will make us the largest healthcare delivery platform across the country by a distance – serving more than two million families every single month,” Dhaval Shah, co-founder of Pharmeasy wrote on professional networking site LinkedIn.
“While we love the Medlife brand, we believe that a singular focus on our consumer needs through a single platform ‘Pharmeasy’ will help us solve consumer needs much better,” he added.
Pharmeasy, founded by Shah and Dharmil Sethi in 2015 is currently connected with 80,000 pharmacies and has a target to expand its outlet up to 1,20,000 across 100 cities by the end of the year.
The company’s business-to-business pharma operations generate around Rs 600 crores in gross merchandise value (GMV) per month, while its front-end online pharmacy generates an additional Rs 240 crore for its platform’s retailers.