CAIT demands rejection of PharmEasy's proposed ₹6,250-crore IPO to SEBI
The Confederation of All India Traders (CAIT) has written to India’s market regulator Securities and Exchange Board of India (SEBI), seeking dismissal of PharmEasy’s initial public offering (IPO) as online pharmacies are allegedly not legal under Indian law.
The organisation - which has eight crore traders and 40,000 trading associations - has highlighted that the sale of medicine over the internet is not allowed as per the order passed by Delhi high court back in 2018.
Last month, Delhi-based South Chemists and Distributors Association (SCDA) had also written a letter to the market regulator to reject PharmEasy’s IPO citing the same reason.
CAIT has also raised concerns over PharmEasy’s acquisition of Thyrocare, a chain of diagnostic and preventive care laboratories. The organisation highlighted that the Competition Commission of India (CCI) has not yet approved the acquisition of Thyrocare.
“The sale of medicine still continues till this date against the order by the honorable high court. Despite an order from the CCI, API Holdings mentions Thyrocare as their subsidiary in the DRHP [draft red herring prospectus] submitted to SEBI,” said Praveen Khandelwal, National Secretary General of CAIT.
PharmEasy is planning to raise ₹6,250 crore in an IPO, which is purely a fresh issue. None of its existing stakeholders would be selling their shareholdings.
The company, in consultation with the bankers to the issue, may consider a private placement aggregating up to ₹1,250 crore. If such placement is completed, the fresh issue size will be reduced.
The Mumbai-based startup would use the proceeds from this IPO to prepay or repay its outstanding debt of ₹1,929 crore, the DRHP highlighted. The company will be looking to invest ₹1,259 crore to fund organic growth initiatives. It has also set aside another ₹1,500 crore would be spent on inorganic growth initiatives through acquisition and organic growth initiatives.
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