Nykaa Eyes to List at $4.5 bn Valuation

Nykaa looks to go public later this fiscal at a valuation of $4.5 billion, a sharp rise from its earlier valuation of over $3 billion, as the beauty retailing startup gains from a marked shift towards online sales during the coronavirus pandemic.

Founded by Falguni Nayar, Nykaa will keep unchanged the size of the public offering at between $500 million and $700 million, said two people directly aware of the internal discussions.

The sources said the rise in Nykaa’s overall valuation is led by a spurt in revenue and profit for the e-commerce platform, primarily due to Covid-related disruptions, which has pushed more consumers to purchase online.

“The roadshows are on for the IPO (initial public offer), and FSN E-commerce Ventures Pvt. Ltd, the holding company of Nykaa, will file its draft red herring prospectus by this June-end or early July, and the IPO should take off in the March quarter of this fiscal,” one of the two people cited above informed.

“The public offer will be coupled with an offer for sale to provide an exit to existing investors. The price band is yet to be decided, but a 10-20 percent stake of the firm could be offered to the public for an adequate free-float.”

Nykaa has appointed Kotak Mahindra Capital Co. and Morgan Stanley as managers for its IPO. While several large startups in the unicorn league, or those with a valuation of more than $1 billion, such as Paytm, Flipkart, Zomato, Policybazaar, Grofers, and Pepperfry, are also looking for public listings, Nykaa is the only startup that is profitable and will meet the criteria to list on the main board of Indian stock exchanges.

Nykaa has reported annual profits since FY19. It was one of 11 startups to become a unicorn last year, after raising $25 million in March 2020 from Steadview Capital.