Nykaa in talks for new funding at $2 bn valuation

Mumbai: Nykaa is in talks to raise $50-$150 million in a secondary financing round, which is expected to value the omnichannel beauty retailer at $2 billion, multiple people in the know of developments told The Economic Times.According to industry insiders, this is a valuation exploration exercise for the Falguni Nayar-led firm before it sets out for an initial public offering (IPO). A secondary transaction is where investors are swapped at the cap table but no fresh capital comes into the company.Nykaa, which has been clocking an annual revenue run rate of around $600 million, is learnt to be seeking a valuation of around $3.5 billion (Rs 25,000 crore) for the IPO, people with direct knowledge of the matter said. Annual run rate is a method of projecting upcoming revenue, typically over a year, based on previously earned revenue.“The company wants to realign its cap table before the IPO, hence some of the early backers may exit making way for newer investors,” said one person aware of the company’s plans.Some of Nykaa’s early investors include AZB Partners’ Zia Mody, Dalip Pathak, Harsh Mariwala and Sunil Munjal and institutional investors such as Techpro Ventures, TVS Capital, Lighthouse Ventures and Sharrp Ventures.The Mumbai-based e-tailer has so far raised around $105-$130 million.The company was valued at around $1.2 billion in March last year when it picked up $25 million in a funding round led by Steadview Capital. In November 2020, Fidelity Investments invested an undisclosed amount, data from Venture Intelligence showed, at what sources said was a valuation of $1.8 billion.“Its current valuation is around $2.1 billion and is expected to touch $3-3.5 billion by the time it hits the IPO street,” said a banker in the know.Nykaa is yet to pick investment bankers for its proposed IPO, but sources said the mandate will likely go to Kotak Mahindra Capital, JPMorgan, Citi and IIFL.Falguni Nayar, founder and chief executive officer of Nykaa, did not respond to emailed queries and text messages. Founded in 2013 by Nayar, who was head of investment banking at Kotak Mahindra Capital, Nykaa has targeted 40% growth over last year’s revenues of Rs 1,860 crore, the company said in November. With the Covid-19 pandemic hastening digital adoption by shoppers, the online cosmetics retailer has seen revenues zoom. Nykaa expects its new fashion business to top Rs 500 crore in sales in the current fiscal year, a 5X growth over sales in the previous year, ET reported in November.Nykaa has a portfolio of more than 300,000 products and partners with more than 1,500 brands.

from Economic Times https://ift.tt/3bUgTY2