Initial Public Offering (IPO)

India's largest e-pharmacy platform PharmEasy is gearing up to file draft papers by October before an Initial Public Offering (IPO) later in the fiscal year.

More Points:

  • PharmEasy is on track for an IPO but is still negotiating with new investors to raise between $200 million and $300 million at a valuation of around $5.6
  • PharmEasy has seen the number of doctors and pharmacists double over the last year. So, they are confident of a good jump in their valuation.
  • The online pharmacy market in India will go up to about $2.7 billion by 2023 from about $360 million in 2020
  • The Mumbai-based company has also started faster medicine deliveries across major markets with its ‘priority’ delivery service, which delivers medicines in three-four hours for a fee.
  • Over half-a-dozen startups have filed for IPOs in the domestic market, including Paytm, PolicyBazaar and Nykaa.

What is an Initial Public Offering (IPO)?

An initial public offering (IPO) refers to the process of offering shares of a private   corporation to the public in a new stock issuance. An IPO  allows  a  company  to  raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes a share premium for current private investors. Meanwhile, it also allows public investors to participate in the offering.

How an IPO Works?

  • Prior to an IPO, a company is considered private. As a pre-IPO private company, the business has grown with a relatively small number of shareholders including early investors like the founders, family, and friends along with professional investors such as venture capitalists or angel investors.
  • An IPO is a big step for a company as it provides the company with access to raising lot of money. This gives the company a greater ability to grow and expand. The increased transparency and share listing credibility can also be a factor in helping it obtain better terms when seeking borrowed funds as well.
  • IPO shares of a company are priced through underwriting due diligence. When a company goes public, the previously owned private share ownership converts to public ownership, and the existing private shareholders’ shares become worth the public trading price.Share underwriting can also include special provisions for private to public share ownership.