PharmEasy, a Mumbai-based e-pharmacy company, recently announced its plan to raise Rs 3,500 crore via the rights issue of Compulsorily Convertible Preference Shares(B). Various institutional investors expressed their interest in investing up to Rs 2,000 crore in API Holdings Pvt Ltd, a parent company of PharmEasy.
With this news, there is a curiosity among retail investors and financial experts about the right issue of CCPS(B). In this blog, we will analyse PharmEasy's right issue of (CCPS)B in detail and discuss its impact on the company's valuation.
Why Is PharmEasy Raising New Funds Via Rights Issue Of (CCPS)B?
As per a report of The Economic Times, PharmEasy breached the covenant on its loan term of Goldman Sachs, due to which it needed to seek out new funds to restructure the loan terms. Before that, the company was looking to raise this capital via its equity. The good news for API Holdings is that Goldman Sachs revised and extended the deadline for the loan repayment to July 2023, which allows the company to opt for issuing (CCPS)B.
Compulsorily Convertible Preference Shares are the key elements of startup financing. If any investor has CCPS, he/she can have more rights than other investors who come in later at a higher valuation. In the previous financial year, PharmEasy made a comeback with a positive cash flow, which enticed its investors. The main reason behind raising the funds of Rs 3500 is to repay the big portion of the debt to Goldman Sachs.
Investors Participation In PharmEasy Series B Funding of CCPS
According to the information shared by Mint, various investors showed their interest in coming up with a large portion of the investment. These rights issue will include a commitment from PharmEasy's existing investors, which includes TPG Growth, Prosus Ventures, CDPQ, Eight Road Ventures, LGT Lightstone, Temasek, Amansa, ADQ(Abu Dhabi Sovereign Wealth Fund), Orbimed, and Sunil Kant Munjals' office family.
As per the rumours, these investors will invest an estimated amount of Rs 2,000 crore. On the other hand, Ranjan Pai's family office may invest Rs 1200 crore during the fresh round.
How Will The Right Issue Of CCPS(B) Affect Pharmeasy's Valuation?
If we talk about the PharmEasy market valuation in the last few years, it has been slashed by various institutions. In the current year, the company's valuation was slashed by nearly 50% by its backers. In February, Neuberger Berman reduced the PharmEasy valuation by 21.4% and put it at $4.4 billion.
In addition, Janus Henderson further adjusted this valuation to $2.8 billion. As a result, PharmEasy share price fell by 70% in the unlisted share market and brought investors a loss. Let's understand the maths of the PharmEasy valuation post-right issue. The company currently has equity shares of 614 cr, while its right issue in CCPS A was 5.48 cr.
After the successful CCPS(B), its rights issue is expected to reach 36.1 crore. In case all of these shares are converted into equity shares, the company shares will be 1,456 crore. If we assume the share price at that time is Rs 5, PharmEasy market valuation will be Rs 7,280 crore.
Will Retail Investors Get Benefit From PharmEasy Right Issue?
The right issue of CCPS(B) may also affect the performance of PharmEasy unlisted shares. Since the company is raising new funds to repay the large portion of debt to Goldman Sachs, it will improve its balance sheet. Retail investors who have or are looking to buy PharmEasy pre-IPO shares may notice an improvement in the company's financials.
Whether it's PharmEasy share price or equity per share, these metrics may benefit retail investors. However, every investor needs to understand the current performance of PharmEasy in the pre-IPO market and plan their investment accordingly.
Invest in PharmEasy Unlisted Shares Hassle-Free With Stockify
PharmEasy is currently working towards becoming debt-free, for which it raises new funds via CCPS(B). It signifies the company is planning to boost its business operations and preparing to get publicly listed. As a retail investor, you can plan your investment in PharmEasy unlisted shares, which might perform well once the company repays the loan.
At Stockify, we help retail investors buy or sell pre-IPO shares of various top-performing companies. Our unlisted shares brokers will guide you with every step and make your investment easy. Ready to buy unlisted shares? Connect with our experts today!
FAQs
1- What is the rights issue price of API Holdings Pvt Limited?
API Holdings Pvt Limited, a parent company of PharmEasy, revised its rights issue from Rs 2,400 crore to Rs 3,500 crore. For more info, connect with experts today!
2- How does the right issue affect the PharmEasy share price?
The right issue can affect the share price of PharmEasy. It can dilute its value and also be affected by the trading volumes.
3- How to check the latest PharmEasy unlisted share price in India?
As per the market data, PharmEasy share price today is Rs 9 per equity share. To stay updated with the future share price of PharmEasy, subscribe to Stockify.
4- What is the process of buying PharmEasy pre-IPO shares online?
The process of buying unlisted shares of PharmEasy and other companies is simple. You can easily buy PharmEasy unlisted shares hassle-free on Stockify.
5- Is it profitable to invest in PharmEasy for long-term growth?
PharmEasy is one of the fastest-growing companies in the pharm-tech space. However, you must check the company's past and current performance before making any investment decision.
