BackReliance-Netmed deal to bring attractive returns for Sistema Asia Fund
The deal also marks Sistema Asia Fund's second exit and monetisationSAF first invested in Netmeds in 2017, and this exit will gather attractive returns for the venture capital fund
PremiumSistema Asia Fund (SAF) on Wednesday said Reliance Industries' ₹620-crore deal to buy Netmeds will bring "attractive returns" for the venture capital fund within three years of its investment in the health-tech company.
Reliance Retail Ventures Ltd has announced the acquisition of majority equity stake in Netmeds for a cash consideration of around ₹620 crore, a move that will further intensify the competition between billionaire Mukesh Ambani's Reliance Industries and Jeff Bezos-led Amazon.
SAF, a venture capital fund sponsored by Russia's Sistema PJSFC, is focussed on investing in technology-enabled, consumer and business-oriented startups in India and Southeast Asia.
"SAF first invested in Netmeds in 2017, and this exit will gather attractive returns for the venture capital fund as the online pharmaceutical startup grew four times its size over the past three years," SAF said in a statement.
The deal also marks Sistema Asia Fund's second exit and monetisation, after selling its stake in Qwikcilver in March 2019, it added.
However, SAF did not disclose details of its shareholding in Netmeds. SAF is in the process of doing a final close of its first fund this year at USD 120 million, the statement said.
Following the exit from Chennai-based Netmeds, Sistema Asia Fund is an investor in eight companies - Licious, Rebel Foods, Uniphore, Lendingkart Technologies, HealthifyMe, Seclore and Kissht.
Sistema Asia Capital Managing Partner Andrey Terebenin said Netmeds' rapid growth over the last few years underlines its strategy of investing in companies with strong scaling potential and solid revenue streams.
"Reliance's backing of Netmeds is a strong endorsement of our investment philosophy, which is to optimise our investors' money into promising projects in India's fast-growing technology market. We are confident that Reliance's entry will accelerate Netmeds' growth and help the startup establish itself as the leader in the online pharmacy sector," he added.
Founded by Pradeep Dadha in 2010, Netmeds is an e-pharmacy brand that serves over four million customers nationwide, enabling them to purchase medicine online, book lab tests and consult verified doctors online.
The company's services have seen a high demand during the COVID-19 pandemic.
The Netmeds deal will strengthen Reliance's position in the e-commerce space, adding to the firm's grocery platform JioMart.
Healthtech startups like 1mg, PharmEasy, Netmeds and Medlife have seen strong growth in the past few months as people turned to online platforms to order their medicines while maintaining social distancing amid the pandemic.
Last week, Amazon India had announced the launch of Amazon Pharmacy, wherein it will deliver prescription-based medication in partnership with a seller on the platform. The service is being launched in Bengaluru initially and may be scaled up to other cities in the future. There are also reports that Flipkart may also venture into the segment, though the Walmart-owned company has not announced any plans yet.
The online medicine market is currently small at 3-3.5 per cent of the total pharma market as existing players do not offer express delivery options and delivery of medicine typically takes 24-48 hours. This limits the market largely to refill prescriptions or for chronic medicines for the new prescriptions, according to industry watchers.
With large players like Reliance and Amazon now battling in the e-pharma segment, the space is bound to see significant expansion in the near future, they added.
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