Nykaa Looks To Bring New Investors On Board In Run Up To IPO

SUMMARY

Nykaa is looking to raise $150 Mn in secondary financing round at a valuation of $2 Bn

The company aims to hit a valuation of $3.5 Bn in the public market

It was valued at $1.2 Bn in March 2020 when it raised a $25 Mn round led by Steadview Capital

In the run up to going public by 2022, beauty and fashion ecommerce platform Nykaa is reportedly in talks to raise $50 Mn to $150 Mn at a valuation of $2 Bn. The company is looking to raise this round with a secondary sale of shares in order to provide an exit to its existing investors — including Techpr Venture, TVS Capital, Lighthouse Ventures and Sharrp Ventures.

Other individual investors such as AZB Partners’ Zia Mody, Warburg Pincus’ Dalip Pathak, Marico’s Harsh Mariwala and Hero Enterprises’ Sunil Munjal will also get a chance to exit the company with this round.

According to an ET report citing sources, Nykaa wants to realign its cap table before it set out for an initial public offering (IPO), hence this round will help the company make a way for newer investors. The company aims to hit the valuation of $3.5 Bn at the public market.

Nykaa was valued at $1.2 Bn in March 2020 when it raised a $25 Mn funding round led by Steadview Capital. The company has further raised an undisclosed amount from Fidelity Investments reportedly at a valuation of $1.8 Bn in November. Besides this, the company has also raised funding from Bollywood stars Alia Bhatt and Katrina Kaif last year.

The Mumbai-based company was founded by Falguni Nayar in 2012. It is an online marketplace for beauty and wellness products with over 1.5K brands and 130K products in its bucket. The company claims to fulfil nearly 1.5 Mn orders a month. It started expanding its presence in physical stores back in 2015 and currently has its footprint across 55 retail store chains and housing luxury brands such as Tom Ford, Jo Malone London, Dior and Givenchy.

Nykaa turned profitable in the financial year 2019, when it recorded a revenue of INR 1,160.98 Cr ($159 Mn, at current conversion rate). The company’s bared expenses worth INR 1,157 Cr ($158.6 Mn, at current conversion rate) leading to a profit of INR 2.31 Cr ($316K, at current conversion rate) in FY2019. It has maintained the same growth in FY2020 as well, with revenues increasing 60% to INR 1,860 Cr ($254 Mn). The company did not disclose any other details about its financials.

According to a report by RedSeer Consulting, the Indian online beauty and personal care market is expected to grow at a CAGR of 9%, from $14-15 Bn in 2017 to $22-23 Bn in 2022. In this segment, Nykaa competes against the likes of Purplle and Scentials.