Exclusive: Nykaa revises its fresh equity offer to raise Rs 630 Cr in IPO

Beauty centric online marketplace Nykaa has revised its draft red herring prospectus (DRHP) to increase the size of the fresh offer by Rs 105 crore. According to regulatory filings, the company will now raise Rs 630 crore through a fresh issue of equity shares.

In August, the company had mentioned in its DRHP that it would raise Rs 525 crore in the upcoming initial public offering (IPO). While media reports estimate that Nykaa would raise over $500 million  (Rs 4,000 crore), it did not disclose the actual size of the IPO in its DRHP at a valuation anywhere around $4.5-5 billion (Rs 35,000- 40,000 crore).

According to industry sources, the company has received approval from SEBI for its public listing and is likely to make its debut on the stock exchange by the end of this month.

Nykaa would utilise fresh proceeds to set up retail stores and warehouses, fund online operations and repay borrowers. Promoters Sanjay Nayar Family Trust and the company’s backers: Lighthouse, TPG Growth, Sunil Munjal among others will dilute their holdings in the proposed IPO.

If the company goes public on $4.5-5 billion, it will be a 2.5X 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. 

Unlike most of the companies that are set to go public, Nykaa is a profitable venture. According to its DRHP, the company had recorded Rs 61.94 crore profit with operating revenue of Rs 2440.89 crore in a fiscal ending March 2021.

The holding of promoters in Nykaa also differentiates itself from other IPO-bound companies. Falguni and Sanjay Nayar and their family trusts hold 53% of the company along with several favourable rights.

Nykaa is also younger than all other consumer internet companies that are set for a public listing. Founded by Nayyar in 2012, Nykaa does over 60,000 orders every day and claims to have over 15 million registered users. It has 73 physical stores across 38 cities in India over three different store formats at the end of FY21.