Beauty startup Nykaa files DRHP to raise funds via IPO

Mumbai: Nykaa, an e-commerce startup for beauty products, has filed a draft red herring prospectus (DRHP) with the Securities Board of India (Sebi) to raise funds via an initial public offering (IPO).

FSN E-Commerce Ventures Ltd, owner of Nykaa, is looking to raise Rs 525 crore through a new share issue and Offer of Sale (OFS) of up to 43.11 million shares by existing shareholders and promoters.

OFS comprises sale of up to 4.8 million shares by the promoter Sanjay Nayar Family Trust. Investors such as TPG Growth IV, Lighthouse India Fund III, Lighthouse India III Employee Trust, JM Financial and Investment Consultancy and Sunil Kant Munjal will also sell their stake in the OFS.

Nykaa was founded in 2012 by investment banker Falguni Nayar.

Currently, Falguni Nayar Family Trust and Sanjay Nayar Family Trust hold 22.33% and 25.72% stake, respectively, in the firm.

Kotak Mahindra Capital, Morgan Stanley India, Bofa Securities, Citigroup Global Market India, ICICI Securities and JM Financial are the main book running lead managers to the issue.

Nykaa will allocate Rs 35 crore from the proceeds of the issue for investment in its arms FSN Brands or Nykaa Fashions to set up new retail stores. Another Rs35 crore and Rs130 crore will be used for capital expenditures and repayment of debt.

Nykaa will use Rs200 crore to increase the visibility and awareness of its brands.

The firm is a digital native technology platform that offers consumers a content-based lifestyle and retail experience. It has a variety of beauty, personal care and fashion products, including brand name products that it owns and manufactures.

As of March 2021, the company had accumulated downloads of 43.7 million through mobile applications and 86.7% of GMV online was made through mobile apps.

Its offline channel includes 73 physical stores in 38 cities in India in three different store formats: Nykaa Luxe, Nykaa On Trend and Nykaa Kiosks.

For FY21, it delivered approximately 2.0 million units of inventory from 3,826 national and global brands to its customers in all business segments. In the period, the total GMV was Rs 4,045.98 crore, which grew by 50.7% from a year ago.

For fiscal year 2021, Nykaa reported revenue of Rs 2,440.90 crore versus Rs 1,767.53 crore a year ago. The net profit was Rs 61.95 crore compared to a loss of Rs 16.34 crore last year.

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