Beauty products e-tailer Nykaa issues ESOP shares worth $8.7 mn

Mumbai based omnichannel beauty ecommerce platform Nykaa has allotted shares worth Rs 64 crore (approximately $8.7 million) under employee stock option schemes.

The board of FSN E-Commerce Ventures, the company that owns Nykaa, passed a special resolution to issue one lakh optionally convertible redeemable preference shares (OCRPS) at a share value of Rs 6059.56 amounting to Rs 60.6 crore, according to regulatory filings.

The holders will be eligible to convert each fully paid up share into one equity share given they continue to be an employee of the company for a period of four years from the date of allotment. The conversion terms are also subject to the company achieving a consolidated annual turnover of Rs 6,500 crores by the financial year ending March 31, 2024.

The shares will be issued on a private placement basis for the purpose of acquiring motivating, rewarding and incentivizing key employees, the filing said.

In addition to the OCRPS, Nykaa also allotted ESOPs worth Rs 3.1 crore to three of its top executives.

Reena Chhabra, CEO of Nykaa Brands, received ESOP shares worth Rs 2 crore and chief financial officer Sachin Parikh was allotted shares amounting to Rs 1 crore. Isha Khakhar, senior manager, performance manager; Atoshi Chakraborty, associate vice president; and Riah Daswani, marketing manager; received shares worth Rs 6 lakhs, Rs 5 lakhs, and Rs 84,500 respectively.

The development comes just days after multiple media reports suggested that the Mumbai-based firm is looking at a stock exchange listing at a valuation of over $3 billion by the end of this year or early 2022.

Nykaa raised an undisclosed investment from Boston-based asset management firm Fidelity Management & Research through a secondary transaction in November last year. The deal facilitated partial exits for its early investors and employees. 

The company had raised $13.2 million in April and $8.85 million in May 2020 in separate rounds from London-based hedge fund Steadview Capital at a valuation of over $1.2 billion. It also secured about $2.6 million in an equity capital infusion from Sunil Kant Munjal, former joint managing director of two-wheeler manufacturing major Hero MotoCorp, in June last year. TVS Shriram Capital, JM Financial, TPG Growth and Lighthouse Advisors are among the other institutional investors in the company.

The company claimed it recorded revenue of Rs 1,860 crores for the year ending March 2020 with EBIDTA of Rs 94 crores. Revenues are projected to grow at around 40% on a consolidated level for FY 2021.

Founded in 2012 by investment banker turned entrepreneur Falguni Nayar, Nykaa sells 2,500 brands and over 1.3 lakh products across categories like skin care, hair care, fragrances, bath and body, and luxury products for women and men. The company claims to have 1.7 crore monthly active visitors on the platform and runs 74 stores across India, with sales of over 15 lakhs orders a month.