Tech Valuation: USA’s Neuberger Berman slashes valuation of India’s Pine Labs, PharmEasy

Funds managed by US-based investment management firm Neuberger Berman cut the valuation of the shares it owns in Indian fintech unicorn Pine Labs by 38 percent and API Holdings, the parent company of medical services company PharmEasy, by 21 percent.

It is the latest example of large Indian startups facing valuation downgrades by investors amid a funding winter and macroeconomic uncertainty. Neuberger Berman Funds downgraded Pine Labs to $3.1 billion as of February 28, 2023 from $5 billion, according to regulatory filings with the United States Securities and Exchange Commission (SEC).

Pine Labs, a Noida-based commerce platform, achieved a valuation of more than $5 billion last year when it raised $150 million from Alpha Wave Global. This investment brought the total fundraising in seven months to about $870 million.

Another investor Invesco, which recently downgraded food delivery company Swiggy, has maintained Pine Labs’ valuation at $5 billion. Pine Labs has raised $1.61 billion in total funding from investors including Vitruvian Partners and Alpha Wave Global.

Pine Labs did not respond to Business Standard’s inquiry regarding a downgrade in its rating.

Neuberger Berman Funds downgraded API Holdings to $4.4 billion from $5.6 billion. In October 2021, Farmasi raised $350 million in a pre-IPO round from a slew of new investors, valuing the company at $5.6 billion.

The Mumbai-based company has total funding of $1.6 billion from investors such as Prosus Ventures and Temasek.

IBI Holdings said in August last year that it had decided to withdraw the draft prospectus (DRHP) submitted to the Securities and Exchange Board of India (SEBI). She cited volatile market conditions and “strategic considerations”. DRHP filed November 9, 2021.

API Holdings recorded a net loss of Rs. 3,992 crore for FY22 as against Rs.641 crore in FY21 (2020-2021), as per the Code of Conduct files filed 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 like 1mg, Netmeds, Flipkart Health+ and Amazon Pharmacy.

A growing number of technology companies are facing price cuts as they see huge losses and lay off staff amid a winter of funding and macroeconomic uncertainties.

“Several unicorn companies saw their valuations decline. Tech unicorn companies that went public in 2021 saw a similar decline. Investors are cautious about supporting companies that focus solely on rapid expansion without a clear path to profitability and sustainability,” said Neha Singh. Co-founder of data analytics company Tracxn. This trend is expected to continue in the near future and we may see more such rounds in the coming months.

US-based investment management firm Vanguard Group cut the valuation of ANI Technologies, the parent company of Ola passenger services, by about 35 percent to $4.8 billion from $7.4 billion, according to regulatory filings with the US Securities and Exchange Commission. Commission (SEC).

Valuation write-offs

US investment firm Invesco, which led Swiggy’s previous funding round, cut the valuation of the food delivery company by 33 percent from $8.2 billion to about $5.5 billion. In January of last year, Swiggy raised $700 million in Invesco-led funding that made the device trendy, nearly doubling its valuation to $10.7 billion.

US-based BlackRock Asset Management downgraded Byju by about 50 percent to $11.5 billion. This is a sharp drop from the $22 billion that Decacorn was estimated to be worth in education technology in 2022.

In 2021, global investment in venture capital reached an all-time high of $589 billion, Singh, of Tracxn, said. In the aftermath of the pandemic, pent-up consumer demand and a shift towards digitalization made tech companies a very attractive investment for venture capital and capital supply reached an all-time high in 2021.

“In 2022, as global tensions escalate with the onset of war between Russia and Ukraine and rising inflation, investors are becoming more cautious, causing less capital flow and an overall decline in valuations of technology companies in both public and private markets. In 2022, we have said Singh. We saw a 37 percent decrease in venture capital funding globally compared to 2021.

Similar trends have been observed in the Indian startup ecosystem, Singh said, which saw a 39 percent drop in funding in 2022 after receiving its highest-ever funding in 2021.