Nykaa IPO gets SEBI nod; eyes on $7 billion valuation; Bid open on 28 October

However, the company noted that its growth rate and profitability may suffer if it fails to acquire new customers in a cost-effective manner.

FSN e-commerce, the parent firm of online cosmetics and personal care retailer, Nykaa, has received approval from the Securities and Exchange Board of India (SEBI) to raise Rs 5,200 crore through an initial share sale.

The firm’s red herring prospectus, published with Sebi on Friday, said it would be open for bids from October 28 to November 1. The price band has been fixed at Rs 1,085-1,125 per share. FSN E-commerce is promoted by Falguni Nair and backed by private equity firm TPG. The company is seeking a valuation of $7 billion (Rs 52,315.55 crore).

Nykaa had filed the draft prospectus for its IPO in August this year. The upcoming IPO includes a fresh issue of shares worth Rs 630 crore and an offer for sale (OFS), which will offload up to 4,197 crore equity shares to existing investors, as per the final prospectus.

About 16 existing investors like TPG Growth IV SF Pte, Lighthouse India Fund, Yogesh Agencies & Investments, JM Financial and others are expected to sell their shares in the IPO.

Existing employees holding stock options in Nykaa have the option to offload a total of 250,000 equity shares in the upcoming IPO. The company also plans to offer a discount of up to 10% of the offer price to eligible employees bidding in the Employee Reservation portion.

Most of the proceeds from the IPO will be used to acquire and retain customers by increasing the visibility and awareness of the brand. It also plans to use the proceeds for repayment or prepayment of outstanding borrowings and future capital expenditure.

Promoters, including founder and CEO Falguni Nair, currently hold over 50% stake in the company, making it one of the few start-ups to go public where promoters hold majority stake.

The company has claimed in its prospectus that there is no listed company in India which is engaged in the same business as Nykaa.

Founded in 2012 by former investment banker Nayar, Nykaa has emerged as a top-rated beauty and personal care retailer in the country with an online presence. Though there are very few vertical competitors in this segment, it faces substantial competition from exit from e-commerce firms like heroineMyntra, Flipkart and others.

Nykaa is also a profitable company, a feat only a handful of venture capital-funded start-ups have achieved.

The online retailer posted a net profit of Rs 62 crore in FY11 as compared to a loss of Rs 16.3 crore in FY11. Nykaa’s total income in FY 2011 was Rs 2,452.6 crore, an increase of 37.9% from Rs 1,777.8 crore in FY 2010. Its expenditure stood at Rs 2,377.2 crore in FY 2011, which is 32.7% higher than Rs 1,790.2 crore in FY 2010.

However, the company noted that its growth rate and profitability may suffer if it fails to acquire new customers in a cost-effective manner.

“We cannot assure you that our historical growth rates will be sustainable or achieved in the future. If we fail to acquire new consumers, or fail to do so in a cost-effective manner, we may wish to extend our review or may not be able to maintain profitability,” Nayaka said in its final prospectus published on Friday.

Nykaa’s businesses primarily include arrangements with other vendors including beauty, personal care and fashion brands, distribution companies, manufacturers, distributors and suppliers of packaging materials.

As of August 31, 2021, Nykaa has 80 physical stores (79 stores for beauty and personal care products and one store for fashion products) in three formats (Nykaa Luxe, Nykaa On-Trend, and Nykaa Kiosks) across 40 cities in India. operated. .