Nykaa raises Rs 2,396 Cr from anchor investors ahead of IPO

FSN E-Commerce Ventures Ltd, which runs online marketplace for beauty and wellness products Nykaa, said it has raised Rs 2,396 crore from anchor investors ahead of its initial share-sale, which opens for public subscription on Thursday.

The company has decided to allocate a total of 21,296,397 equity shares to anchor investors at Rs 1,125 a share, aggregating to Rs 2,395.84 crore, according to a circular uploaded on the BSE website.

BlackRock Global Funds, Fidelity Funds, Nomura, Government of Singapore, Monetary Authority of Singapore, Canada Pension Plan Investment Board, T Rowe Price, Tiger Global Investments Fund, Goldman Sachs and Morgan Stanley are among the investors that participated in the anchor book.

In addition, shares have been allocated to domestic funds including Aditya Birla Sun Life Mutual Fund (MF), SBI MF, HDFC MF, Axis MF, UTI MF, Sundaram MF and Tata MF.

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The IPO of FSN E-Commerce Ventures comprises fresh issue of equity shares worth Rs 630 crore and an offer for sale (OFS) of 41,972,660 equity shares by promoter and existing shareholders.

Those selling shares in the OFS are -- promoter Sanjay Nayar Family Trust and shareholders -- TPG Growth IV SF Pte Ltd, Lighthouse India Fund III, Limited, Lighthouse India III Employee Trust, Yogesh Agencies & Investments, J M Financial and Investment Consultancy Services and some individual shareholders.

The issue, with a price band of Rs 1,085-1,125 a share, which will open for public subscription on October 28 and conclude on November 1.

At the upper end of the price band, the initial share-sale is expected to fetch Rs 5,352 crore.

Going by the draft papers, the company 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.

In addition, the company is planning to deploy the proceeds of the IPO for marketing and promotional activities, to focus on strengthening its 13 owned brands such as Nykaa Cosmetics, Nykaa Naturals and Kay Beauty along with establishing and promoting new brands.

"Nykaa has had quite a journey! Key to that has been the fact that they set organization processes, and standardised protocol, in the early-stage, when most startups don't even give it a thought. For instance, they got their inventory management in order by tying up with suppliers exclusively (like Huda)," Nikhil Kamath, co-founder, True Beacon and Zerodha, said.

FSN E-Commerce Ventures Ltd, which was founded in 2012 by Falguni Nayar, is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers.

The company has a diverse portfolio of beauty, personnel care and fashion products, including its owned manufactured brand products, under its two business verticals -- Nykaa and Nykaa Fashion.

The company reported a net profit of Rs 61.94 crore for FY21 compared to a net loss of Rs 16.34 crore in FY20. Its revenue from operations jumped to Rs 2,441 crore in FY21 from Rs 1,768 crore in FY20.

The company is one of the leading influential lifestyle platforms in India with over 12.6 million followers across leading social media platforms as of March, 2021

Kotak Mahindra Capital Company, Morgan Stanley India Company, BofA Securities India, Citigroup Global Markets India, JM Financial and ICICI Securities are merchant bankers to the issue.

The equity shares of the company will be listed on the BSE and NSE.