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Nykaa set to file DRHP at a $4Bn valuation for its IPO

Beauty and fashion e-commerce platform Nykaa is planning to file for an initial public offering (IPO), which could value the company at more than $4 billion. This is another example of the rising popularity in India’s technology industry. The country’s leading cosmetics e-commerce startup, founded by Falguni Nayar, plans to file its Draught Red Herring Prospectus (DRHP), in the next few days.

Nykaa – Makeup/Beauty Shopping on the App Store

Source: Apple App Store

The lifestyle retailer expects to liquidate slightly more than 10% of the shares, which might raise $400 million or even more. According to media reports, the overall valuation of Nykaa is driven by an increase in revenue and profit for the e-commerce platform, especially in the context of Covid-related disturbances that have encouraged more consumers to shop online.

Falguni Nayar, a former investment banker, founded the Mumbai-based startup in 2012. It’s a beauty and wellness online platform with over 1500 brands and 1.3 lakhs items. The company claims to handle about 1.5 Mn orders on monthly basis. Nykaa’s upcoming IPO will be handled by Kotak Mahindra Capital Co. and Morgan Stanley.

Nykaa was valued at $1.2 billion when the company secured around $25 million in a fundraising round backed by Steadview Capital in March 2020. In November, the company also raised an undisclosed sum from Fidelity Investments at a valuation of $1.8 billion. Moreover, the lifestyle retailer secured capital from Bollywood celebrities Alia Bhatt and Katrina Kaif last year.

Nykaa has also introduced offline shops in 2015, which now has 80+ outlets in 3 formats, establishing an omnichannel footprint despite originating as an online beauty business. Nykaa Luxe includes global brands whereas On-Trend offers luxury and prestigious labels such as Tom Ford, Jo Malone London, Dior, and Givenchy. Luxe is now home to a wide variety of luxurious brands. Nykaa has grown into Nykaa Fashion in 2018 and well into Nykaa Man dedicated to men’s care products, fashion, as well as accessories.

Indian startups aiming for IPOs:

This year, India’s technology ecosystem has surged, with startups attracting record volumes of venture capital as well as a whirlwind of initial public offerings. Zomato Ltd., an online food-delivery service, became the country’s first unicorn to go public this month, raising $1.3 billion. Its stock has increased by more than 75%, valuing the loss-making firm at $14 billion.

Policybazaar, an online insurance platform financed by Japan’s SoftBank Group Corp., is also likely to submit its Draft Red Herring Prospectus in the upcoming days, with more than a handful of technological startups planning for IPOs by next year. Nykaa however refused to disclose the timeline of the IPO or perhaps the detailed information of the company’s valuation.

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