Beauty startup Nykaa files draft papers for IPO

Beauty and lifestyle omni-channel company Nykaa has filed draft papers for an initial public offering (IPO) with the market regulator. 

Nykaa, founded by investment-banker-turned entrepreneur Falguni Nayar, is the latest PE/VC backed company this year to tap the capital markets in a sign of the maturity of the startup ecosystem.  

Late last month, Zomato became the first tech unicorn to list on the domestic bourses.  

Just earlier this week, online insurance aggregator also filed draft papers with the Securities and Exchange Board of India (SEBI).  

Payments companies Paytm and Mobikwik and online automobile marketplace CarTrade have also filed draft papers for the public float. 

In April, VCCircle had reported that Nykaa had rounded up five bankers for the public float. 

Nykaa's IPO comprises fresh issue of shares up to Rs 525 crore and offer for sale (OFS) of up to 43.11 million shares by the shareholders, according to the draft red herring prospectus (DRHP). 

Investors including TPG Growth will sell shares up to 5.42 million; and Lighthouse will offload shares up to 4.89 million. The company's promoter, Sanjay Nayar Family Trust, will sell shares up to 4.8 million.  

Falguni’s husband Sanjay Nayar, is the chairman of KKR India. He is also additional non-executive director at Nykaa. 

The company will use the net proceeds for investment in its subsidiaries, capital expenditure, repayment or pre-payment of outstanding borrowings, branding and for general corporate purposes. 

The online marketplace, run by Nykaa E-retail Pvt Ltd, sells products across categories ranging from skincare, hair care, fragrances, bath and body, and luxury products for both women and men.  

The group also operates retail stores such as Nykaa Luxe and Nykaa On Trend via FSN Brands Marketing Pvt Ltd. The parent entity is FSN E-commerce Ventures Pvt Ltd. 

The company's online channels include mobile applications, websites and mobile sites. As of March 31, 2021, the company had cumulative downloads of 43.7 million across all its mobile applications and 86.7% of its online gross merchandise value (GMV) came through its mobile applications in fiscal 2020-21. Its offline channels had 73 physical stores across 38 cities in India over three different store formats as of March 31, 2021. 

Nykaa's revenue from operations grew to Rs 2,440.8 crore in fiscal 2020-21 as compared with Rs 1,767.53 crore in the previous financial year.

It reported a profit of Rs 61.9 crore during the period as compared with a loss of Rs 16.34 crore. Its GMV grew 50.7% to Rs 4,045.98 crore in the last fiscal. 

The book running lead managers to the issue are Kotak Mahindra Capital, Morgan Stanley India, BofA Securities India, Citigroup Global Markets India, ICICI Securities and JM Financial.