Nykaa Files DRHP With SEBI For INR 4,000 Cr Initial Public Offering

Lifestyle ecommerce platform Nykaa has filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI to raise INR 4,000 Cr via an initial public offering (IPO).

As a mandatory process before filing the DRHP, the startup recently converted itself into a public company. As per a regulatory filing, the equity shareholders of the startup in a meeting on July 16 have passed a resolution to change the name of the company from FSN E-Commerce Ventures Private Limited to FSN E-Commerce Ventures Limited. 

The company in its filing said that it is proposing to undertake an initial public offer of its equity shares of face value of INR 1 each by way of fresh issuance of equity shares along with an offer of sale from existing and eligible shareholders.

Founded by former investment banker Nayar in 2012, Nykaa has managed to emerge as a go-to-ecommerce platform for fashion products. The company competes against the likes of heavily invested companies such as Amazon, Myntra, Flipkart, Big Basket, among others. 

The Mumbai-headquartered startup entered the unicorn club in December last year after it raised around $13.6 Mn from its existing investor Steadview Capital. The funds were raised as part of Nykaa’s Series F funding round. The startup to date has raised a total of $70 Mn from investors such as TPG Growth, Lighthouse Funds, and Fidelity Management and Research Company, among others. The startup has also acquired Pipa.Bella earlier this year and 20Dresses in 2019.

Nykaa has turned profitable in FY19 when it recorded a revenue of $159 Mn. The startup’s expenses clocked at $158.6 Mn leading to a profit of $316K in FY2019. It maintained the same growth in FY2020 as well, with revenues increasing 60% to $254 Mn. At present Nykaa boasts of 15 Mn registered users and delivers 1.5 Mn orders per month.

The company recorded a revenue of INR 1,860 Cr with an EBITDA (earnings before interest, taxes, depreciation, and amortisation) of INR 94 Cr for the financial year 2020, the company said while announcing the partial exit for its early-stage investors and employees.  The company also claimed that its revenue is projected to grow around 40% on a consolidated level for FY2021.

“Nykaa is appropriately positioned to benefit from the recent tailwinds that have supported sales for predominantly online businesses. The combination of accelerated consumer activity online, and overall brand performance for Nykaa has boosted its market share in the beauty business as well as jump-started growth for its fashion platform,” the company earlier said in a press statement.

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