Nykaa looks to raise Rs 3,500-4,000 cr via IPO

FSN E-Commerce Ventures, which runs online marketplace for beauty and wellness products Nykaa, has filed preliminary papers with markets regulator Sebi to raise Rs 3,500-4,000 crore through an initial share-sale.

The initial public offering (IPO) comprises fresh issue of equity shares worth Rs 525 crore and an offer for sale (OFS) of 43,111,670 equity shares by promoter and existing shareholders, according to draft red herring prospectus (DRHP).

Those selling shares in the OFS are -- promoter Sanjay Nayar Family Trust and shareholders --TPG Growth IV SF Pte Ltd, Lighthouse India Fund III, Limited, Lighthouse India III Employee Trust, Yogesh Agencies & Investments,  J M Financial and Investment Consultancy Services and some individual shareholders.

However, most of the investors are not cashing out fully, and will continue to retain some stake in the company post-IPO.

Promoter entity is selling less than 2 per cent of its holding in the company and will retain majority stake of more than 51 per cent post-IPO.

According to merchant banking sources, the initial share-sale is expected to fetch Rs 3,500-4,000 crore valuing the company in the range of $5 billion to $5.5 billion.

Going by the draft paper, the company plans to use the proceeds from the IPO for expansion, by setting up new retail stores and establishing new warehouses.

It also plans to retire some of its debt, which should bring down interest costs, and further shore up its profitability.

In addition, the company is planning to deploy the proceeds of the IPO for marketing and promotional activities, to focus on strengthening its 13 owned brands such as Nykaa Cosmetics, Nykaa Naturals and Kay Beauty along with establishing and promoting new brands.

FSN E-Commerce Ventures, which is founded in 2012 by Falguni Nayar, is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers.

The company has a diverse portfolio of beauty, personnel care and fashion products, including its owned manufactured brand products, under its two business verticals – Nykaa and Nykaa Fashion.

Nykaa has joined the league of new age technology companies like Paytm, MobiKwik and PolicyBazaar which have filed their IPO papers with Sebi after the successful listing of Zomato.

The company has reported a net profit of Rs 61.94 crore for FY21 compared to a net loss of Rs 16.34 crore in FY20.

Its revenue from operations jumped to Rs 2,441crore in FY21from Rs 1,768 crore in FY20.

It clocked nearly 57 per cent CAGR in gross merchandise value (GMV) from FY19-FY21, and more than 48 per cent CAGR in revenue terms from FY19-FY21.

The company is one of the leading influential lifestyle platforms in India with over 12.6 million followers across leading social media platforms as of March, 2021.

Kotak Mahindra Capital Company, Morgan Stanley India Company, BofA Securities India, Citigroup Global Markets India, JM Financial and ICICI Securities have been appointed as merchant bankers to advise the company on the IPO.

The equity shares of the company will be listed on the BSE and NSE.

In April, Nykaa Fashion acquired online jewellery brand Pipa Bella. Nykaa Fashion has previously strengthened its product portfolio by acquiring the brand Twenty Dresses.

Photograph: Courtesy Nykaa