Nykaa files for Rs 4,000 crore IPO

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BENGALURU: Beauty and fashion retailer Nykaa has filed a draft red herring prospectus for an IPO. It plans to offer fresh equity shares worth Rs 525 crore and an offer for sale of up to 43 million shares. Nykaa plans to raise Rs 4,000 crore from the IPO, which would value the company at $5 billion-$5.5 billion.
Nykaa, which sells online and has 70 physical stores, 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, the filing said.
Founded in 2012 by Falguni Nayar, a former MD of Kotak Mahindra Capital Company, Nykaa has over 1,500 brands with a comprehensive selection of makeup, skincare, haircare, fragrances, personal care, luxury and wellness products for women and men. It has a portfolio of luxury brands including Bobbi Brown and Estee Lauder.
The shareholders who are selling a part of their stake in the offering include Sanjay Nayar Family Trust, private equity firm TPG, Lighthouse, JM Financial and Sunil Kant Munjal, chairman of Hero Group. However, most of the investors are not cashing out completely, and will continue to retain some stake in the company post-IPO. The promoter and promoter group will continue to hold more than 51% of the company’s shares after the IPO.
Nayar and her husband Sanjay, who is also the chairman of private equity firm KKR India, hold about 47% of the company through two family trusts. The company reported a profit of Rs 62 crore for the fiscal ended March 31, compared to a loss of Rs 16 crore in the year before. Total revenue jumped 38% to Rs 2,452 crore despite the pandemic last year.
Nykaa said the contribution from tier 2 and tier 3 cities has increased to 64% in 2020-21, compared to 56.9% in the year before.
Globally, there’s been a rise of personalised beauty and cosmetic startups including Ipsy, Fenty Beauty, Morphe, Kylie Cosmetics and the Honest Company.
Nykaa is also planning to deploy the IPO proceeds for marketing and promotional activities, and to strengthen its 13 owned brands including Nykaa Cosmetics, Nykaa Naturals and Kay Beauty. It also plans to establish and promote new brands.

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