E-commerce Company Nykaa Secures Rs 2,396 cr from Anchor Investors Ahead of IPO

Nykaa has decided to allocate a total of 21,296,397 equity shares to anchor investors at Rs 1,125 per share, aggregating to Rs 2,395.84 crore.
E-commerce Company Nykaa Secures Rs 2,396 cr from Anchor Investors Ahead of IPO

Nykaa, which is administered by FSN E-Commerce Ventures Ltd, has secured Rs 2,396 crore from anchor investors ahead of its initial share sale, which opens for public subscription.

According to BSE filing, the company has decided to allocate a total of 21,296,397 equity shares to anchor investors at Rs 1,125 per share, aggregating to Rs 2,395.84 crore. 

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

The company has also allotted shares to domestic funds including SBI MF, HDFC MF, Aditya Birla Sun Life Mutual Fund (MF), Sundaram MF,  Tata MF, Axis MF, and UTI MF. 

Nykaa’s Plan for Issuance of Shares 

Nykaa’s IPO comprises a fresh issue of equity shares worth Rs 630 crore and an offer for sale (OFS) of 41,972,660 equity shares by the promoter and existing shareholders.

Those selling shares in the OFS are -- promoter Sanjay Nayar Family Trust and stakeholders --TPG Growth IV SF Pte Ltd, Lighthouse India Fund III, Limited, Lighthouse India III Employee Trust, Yogesh Agencies and 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, 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.

Uses of IPO Proceeds 

According to draft papers, the brand plans to use the proceeds from the IPO for expansion, by opening new retail stores and setting up new warehouses. Additionally, it decides to retire some of its debt, which should reduce interest costs, and further support its profitability.

"Nykaa has had quite a journey! The key to that has been the fact that they set organization processes, and standardized protocol, in the early stage, when most startups do not 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 at True Beacon and Zerodha, said.

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.

Financial Backdrop

FSN E-Commerce Ventures Ltd, which was founded in 2012 by Falguni Nayar, 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 has 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. 

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. Its equity shares will be listed on the BSE and NSE.


 

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