API Holdings, the parent of PharmEasy, has withdrawn the draft red herring prospectus (DRHP) submitted for an initial public offering (IPO).

The digital healthcare platform, which also has brands such as Thyrocare under its belt, said the draft papers are being withdrawn because of “market conditions and strategic considerations’’.

API Holdings’ decision comes at a time valuations of new-age companies have taken a hit over the past few months.

Market circles added that though the secondary markets have shown an upswing in recent weeks with the return of FPIs, primary market issuers are biding their time and waiting for stability to return to valuations. Shares like Paytm, Zomato, and PB Fintech are trading at a discount to their issue price.

A Reuters report, citing sources, recently claimed that PharmEasy is in talks with investors to raise $200 million, but at a valuation that could be 15 per cent or even 25 per cent lower than last year’s $5.1 billion.

The report had said that the online pharmacy company’s planned fundraising will see participation from some existing investors, who have indicated they will commit about $115 million in the new round.

This reflects the current environment where start-ups are seeing their valuations soften as capital flows have tightened due to geo-political tensions and fears that some of the world economies could slip into a recession.

The IPO of Syrma SGS Technologies, an electronics system design and manufacturing firm, closed for subscription on August 18 and it was subscribed by more than 32 times.

The float was the first to hit the market after a gap of more than two months. Reports say that more than two dozen firms have Sebi approval to raise above Rs 40,000 crore through IPOs.

Though their timing is not available, some of the new age firms that are IPO bound include OYO Rooms and Mobikwik among others.

Imagine Marketing, the parent of the Boat brand of earphones and smartwatches, had also filed papers for an IPO earlier this year.

Focus on rights issue

API Holdings said it is committed to its expansion goals and is planning to raise funds through a rights issue. This rights issue, it added, will be “open for a period of 30 days, starting from on or around the first week of September’’.

The type of instrument to be used for the proposed fundraise will be compulsory convertible preference shares (CCPS), and the issue price is expected to be around Rs 100 per CCPS, it disclosed.

“Shareholders of the company will receive the letter of offer inviting them to participate in the rights issue on the terms which will be approved by the board,” the company added.

The seven-year-old pharmacy start-up grabbed everyone’s attention in June 2021 when it acquired diagnostic chain Thyrocare Technologies for about Rs 4,546 crore.

A couple of months earlier PharmEasy had become a unicorn after raising a $350 million round co-led by Prosus Ventures and TPG Growth. The startup counts Tiger Global, Temasek, Eight Roads, and Think Investments among its marquee investors.

In November last year, API Holdings filed draft papers with the Securities and Exchange Board of India (Sebi) for the IPO.

The company was planning to raise Rs 6,250 crore through the float and this was proposed to be done through fresh issuance of equity shares, according to the DRHP.

The company had then said it may consider a private placement of equity shares of Rs 1,250 crore and if this is done, the issue size will be reduced.

With inputs from Reuters