Funds managed by US-based investment management firm Neuberger Berman have marked down the valuation of the shares they hold in Indian fintech unicorn Pine Labs by 38 per cent and API Holdings, the parent firm of medical services firm PharmEasy, by 21 per cent.
It is the latest instance of large Indian start-ups facing valuation markdown by investors amid a funding winter and macroeconomic uncertainty. Neuberger Berman funds reduced the valuation of Pine Labs to $3.1 billion as of February 28, 2023 from $5 billion, according to the regulatory filings with the Securities and Exchange Commission (SEC) of USA.
Pine Labs, a Noida-based merchant commerce platform, achieved a valuation of more than $5 billion last year when it raised $150 million from Alpha Wave Global. That investment brought its total fundraising in seven months to around $870 million.
Another investor Invesco, which recently reduced the valuation of food delivery firm Swiggy, has maintained Pine Labs’ valuation at $5 billion. Pine Labs has raised a total funding of $1.61 billion from investors that include Vitruvian Partners and Alpha Wave Global.
Pine Labs didn’t respond to Business Standard’s query related to markdown in its valuation.
Neuberger Berman funds reduced API Holdings’ valuation to $4.4 billion from $5.6 billion. In October 2021, PharmEasy raised $350 million in a pre-IPO round from a slew of new investors, valuing the company at $5.6 billion.
The Mumbai-based firm has a total funding of $1.6 billion from investors such as Prosus Ventures and Temasek.
API Holdings said in August last year has decided to withdraw its draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (Sebi). It cited volatile market conditions and ‘strategic considerations’. The DRHP was filed on November 9, 2021.
API Holdings reported a net loss of Rs 3,992 crore for FY22 against Rs 641 crore in FY21 (2020-21), as per RoC filings by the company with the Ministry of Corporate Affairs.
API Holdings, the parent entity of PharmEasy, is a digital healthcare platform that competes with companies such as 1mg, Netmeds, Flipkart Health+ and Amazon Pharmacy.
An increasing number of tech companies are facing valuation markdowns as they are witnessing steep losses and are laying off employees amid a funding winter and macroeconomic uncertainties.
“Many unicorns have seen their valuations drop. Tech unicorns that went public in 2021 have experienced a similar drop. Investors are being careful about backing firms that are solely focused on rapid expansion without a clear path to profitability and sustainability,” said Neha Singh, co-founder at data analytics firm Tracxn. “This trend is expected to continue for the near future and we might see more such down rounds in the coming months.”
US-based investment management firm Vanguard Group has marked down the valuation of ANI Technologies, the parent company of ride-hailing firm Ola, by about 35 per cent to $4.8 billion from $7.4 billion, according to regulatory filings with the US’ Securities and Exchange Commission (SEC).
US investment firm Invesco, which led Swiggy’s previous funding round, has marked down the food delivery firm’s valuation by 33 per cent from $8.2 billion to about $5.5 billion. In January last year, Swiggy raised $700 million in Invesco-led funding, which made the outfit a decacorn, almost doubling its valuation to $10.7 billion.
US-based asset manager BlackRock has reduced the valuation of Byju’s by about 50 per cent to $11.5 billion. This is a sharp decrease from the $22 billion at which the edtech decacorn was valued at in 2022.
Singh, of Tracxn, said that in the year 2021, global venture capital investment reached an all-time high of $589 billion. Following the pandemic, the pent-up consumer demand and shift towards digitization made tech firms a very attractive investment for VCs and capital supply reached all-time highs in 2021.
“In 2022, as global tensions rose with the start of the Russia-Ukraine war and rising inflation, investors became more cautious, causing a reduction in capital flow and an overall drop in valuations of tech companies across both public and private markets. In 2022, we saw a drop of 37 per cent in VC funding at a global level as compared to 2021,” said Singh.
Singh said similar trends were observed in the Indian startup ecosystem, which saw a 39 per cent decrease in funding in 2022 after receiving its highest funding ever in 2021.