Exclusive: Ahead of filing DRHP, Nykaa converts into a public company

After Zomato’s blockbuster IPO demonstrated the appetite for consumer internet firms in public markets, the list of firms planning IPO’s soon continues to grow. After CarTrade, MobiKwik, Paytm and PolicyBazaar, Nykaa has converted into a public entity now.

Nykaa’s shareholders passed a special resolution on July 16 and approved the change in the status of the company from a private company limited by shares to a public company limited by shares, regulatory filings show. 

According to filings, the holding company of Nykaa has been renamed FSN e-commerce Ventures Limited from FSN e-commerce Ventures Private Limited.

The move takes the nine-year-old company just a step away from filing its Draft Red Herring Prospectus or DRHP. According to Entrackr sources, Nykaa is likely to file its DRHP a few days from now.

While the company didn’t disclose the details of the IPO including the size of the issue and valuation, it’s reportedly eyeing raising up to $700 million at a valuation of $4.5 billion in the IPO, as per a Mint report. Nykaa has also finalised investment banks including Kotak Mahindra Capital, Citibank, ICICI Securities, Morgan Stanley, JM Financial and Bank Of America for the IPO.

If the company goes public on this valuation, it will be a sharp increase from its 1.8 billion valuation in November 2020 when Boston-based Fidelity Investments had picked up secondary shares in the Mumbai-based firm. 

Nykaa has also allotted 31.13 crore equity shares as bonus shares to its 143 shareholders. Nayar Family and their trust are the largest beneficiaries of this bonus with 16.89 crore which constitutes 54.27% of the bonus issue, separate regulatory filings show.

Queries sent to Nykaa did not elicit an immediate response. We’ll update the post in case they do.

Unlike most of the aforementioned companies who are set for a public listing, Nykaa is closer to profitability. The company had earned operating revenue of Rs 1,850.10 crore, which grew by 57% from  Rs 1,159.02 crore it earned in FY19. While it recorded annual losses of Rs 23 crore in FY20, its EBITDA margins improved to 4.61% from 2.95% in FY19.

Importantly, the company is also younger than all other consumer internet companies who are set for a public listing. Founded by Falguni Nayyar in 2012, Nykaa does 50,000-60,000 orders every day and claims to have over 15 million registered users.

While Zomato has already raised Rs 9,375 crore through its successful IPO, Paytm and MobiKwik are in the pipeline with plans to raise Rs 16,600 crore and Rs 1,900 crore respectively. SoftBank-backed PolicyBazaar is planning to raise up to Rs 6,500 crore through its IPO.

Entrackr had exclusively reported about PolicyBazaar’s IPO plan on July 20.