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PharmEasy IPO: API Holdings pulls out IPO papers, proposes rights issue

PharmEasy
PharmEasy IPO news – After receiving approval from capital market regulator SEBI (Securities Exchange Board of India) in February of this year, PharmEasy withdrew its initial public offering (IPO).

After receiving approval from capital market regulator SEBI (Securities Exchange Board of India) in February of this year, PharmEasy withdrew its initial public offering (IPO).
According to the company, the IPO plans were dropped owing to market conditions and strategic concerns. PharmEasy now intends to raise money through a rights issue.

The draft red herring prospectus which was filed on 9th November, 2021 has been withdrawn, according to a statement made on 19th August, 2022 by API Holdings, the parent company of PharmEasy.

Why did API Holdings (PharmEasy) withdrew it’s IPO plans?

According to statement from API holdings (PharmEasy) – Market Conditions and Strategic Considerations are the rationale for delaying the IPO plans. API holdings received approval for its IPO from SEBI in February, 2022 but the market conditions deteriorated amid Russia-Ukraine War. The valuations of majority of the start-ups & new-age companies dropped. It might be possible that the company may not get desired valuations in IPO owing to the market conditions which may have forced them to call-off/delay their IPO plans.

API Holdings (PharmEasy) Right Issue: The company plans to raise funds via rights issue

After withdrawing its IPO DRHP, API Holdings (PharmEasy) now proposes to raise funds via rights issue.
“The Company continues to be committed to its growth objectives and keeping in mind the support received from its strong shareholder base, the company is pleased to inform you that it is considering a rights issue in accordance with the Companies Act, 2013 and its Articles of Association,” the company said.

The Company also stated that its shareholders will receive the letter of offer inviting them to participate in the rights issue on the terms which will be approved by the board.

What is Rights Issue?

A rights issue is an offer by the company to the existing shareholders to buy additional shares in the company. This is one medium to raise funds where the company gives first chance/preference to its existing shareholders to invest more in the company. It should be noted that it is just an offer and not compulsory to buy/subscribe to new additional shares. The company issues new shares directly to the existing shareholders who apply for the rights issue.

When a company requires cash, they can use rights issues to obtain funds. Companies provide shareholders the option, but not the obligation(compulsion), to purchase additional shares in these rights issues.

Key Parameters of PharmEasy Rights Issue indicated by the company

  • Type of Instrument: Compulsory Convertible Preference Shares (CCPS)
  • Issue Price: Expected to be around ₹100 per CCPS
  • Estimated Timeline: The rights issue will be opened for a period of 30 days, starting from on or around the first week of September

What does this mean in simple terms?

API Holdings will announce the details and terms of the proposed rights issue once it is approved by the board. The eligible shareholders should get an intimation from the company. You can also track the latest developments regarding PharmEasy Rights Issue and PharmEasy IPO on our Website and Telegram Channel. It would be interesting to check the size of the proposed API Holdings rights issue and conversion ratio (if any).

FAQ regarding API Holdings (PharmEasy) Rights Issue

What is the price of API Holdings (PharmEasy) Rights Issue?

API Holdings (PharmEasy) Rights Issue is likely to be priced around ₹100 per CCPS (Compulsory Convertible Preference Shares). The exact price will be declared by API Holdings as per the decision taken by the board.

Will I be eligible to apply in API Holdings (PharmEasy) Rights Issue?

API Holdings will announce the record date for eligibility to apply in the rights issue. If you held API Holdings (PharmEasy) shares in your demat account on that record date, you will be eligible to apply in API Holdings (PharmEasy) Rights Issue.

How to apply for the API Holdings (PharmEasy) Rights Issue?

If you are an eligible shareholder to apply for the API Holdings (PharmEasy) rights issue, the company will send you the offer letter and application form.

When will the API Holdings (PharmEasy) Rights Issue open for subscription?

API Holdings (PharmEasy) rights issue will be opened for a period of 30 days, starting from on or around the first week of September. The exact dates are yet to be announced by the company.


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