API Holdings Ltd, the parent of Pharmeasy, is planning to raise around $ 250 million from private equity investors.

Pharmeasy has been engaged in talks with the credit arms of at least two American private equity firms. The transaction is expected to close soon. This is a bridge financing round to help the company fund its business till markets become more conducive to launch an IPO.

The funds will be used by India’s largest digital healthcare platform to repay certain loans, as well as for working capital requirements. Pharmeasy plans to raise Rs.6,250 crore through its IPO, of which Rs.1,929 crore will be used for paying of outstanding debt.

According to the reports, the company and certain subsidiaries have entered financing arrangements for availing various credit facilities from banks and financial institutions, including borrowings in the form of terms loans, fund-based and non-fund-based working capital facilities. Last September, the company total outstanding borrowings of Rs.2, 494.73 crore on a consolidated basis.

The company is planning to utilize an estimated Rs.1, 929 crore from the net proceeds towards prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and certain of our subsidiaries. This shall include investments to be made by the company in certain subsidiaries, who in turn shall utilize the funds for repayment or prepayment of all or a portion of their borrowings.

The current market volatility has impacted IPO launches for companies, and tech companies have also been hit on valuations. Therefore, the companies that have near-term capital requirements are evaluating a debt round to avoid diluting equity at softer valuations ahead of their IPOs. These are expensive loans, and can cost as much as 15 percent in dollar terms, but can be of great help for these companies in the current environment, as per reports.