Nykaa raises Rs. 2396 crores via anchor investors ahead of IPO

FSN E-Commerce Ventures Ltd., the operator of the online platform for wellness and beauty products Nykaa, raised as much as Rs. 2396 crores via anchor investors. Nykaa made this announcement on 27 October 2021, a day before the opening date of its IPO.

Moreover, after consulting with its merchant bankers, the company opted to allocate 21,296,397 equity shares to the anchor investors. According to a BSE circular, these shares will be allocated at Rs. 1,125 per share.

Here’s more information about this IPO.

A Brief Overview of this IPO, its Participating Domestic and Marquee Investors 

The participating marquee investors in the anchor book are:

• BEST Investment Corporation
• Blackrock Global Funds
• Emerging Markets Growth Fund
• Government of Singapore
• Fidelity Funds
• T Rowe Price
• Canada Pension Plan Investment Board
• Aberdeen Abu Dhabi Investment Authority
• JP Morgan
• Goldman Sachs
• CLSA
• Monetary Authority of Singapore

In addition, the domestic investors included:

• SBI Mutual Fund
• Nippon Life India Trustee
• Aditya Birla Sun Life Trustee
• HDFC Trustee Company
• Kotak MF
• Axis Mutual Fund
• Franklin MF
• ICICI Prudential
• IDFC MF
• Sundaram MF
• Tata MF
• L&T MF
• UTI MF
• Edelweiss

In connection to the total allotment to anchor investors, the company allotted 33.33% or 70,98,801 equity shares to 21 domestic mutual funds via 93 schemes. Moreover, a total fund of around Rs. 798.61 crores was raised from these mutual funds.

This multi-brand fashion and beauty care platform plans to raise Rs. 5,351.92 crores via its IPO. This issue size will consist of an offer for sale of Rs. 4,721.92 crores and a fresh issue of Rs. 630 crores by several shareholders, which will include investors and promoters.

Further, the company will utilise the proceeds for the following purpose:

• 42 crores investments in its two subsidiaries, namely, Nykaa Fashion and FSN Brands, to fund the setup of new retail outlets.
• 42 crores for capital expenditure to be sustained by the company. Also, for investments in certain subsidiaries, including Nykaa Fashion, Nykaa E-Retail and FSN brands to fund the elevation of warehouses.
• 155 crores for prepayment or repayment of remaining borrowings by one of the subsidiaries, Nykaa E-Retail.
• Disbursement of Rs. 234 crores towards retaining and acquiring customers through the enhancement of the visibility and awareness of the brand, and
• General corporate purposes

What’s the take of analysts for this IPO?

With its IPO, online retail giant Nykaa will aim towards a valuation of more than $7 billion. This unicorn company offers over 4000 personal care, fashion, and beauty brands through its app and 80 outlets.

Further, the rise of direct to customer channels and online brands has initiated effective and innovative ways for brands to market their products. Various emerging local brands have also witnessed increasing popularity recently. Considering the prospects of this business, analysts have been assigned to subscribe long-term rating to Nykaa IPO.

Bottom Line

Nykaa could be an attractive option for investors indeed. Besides, interested investors can also look into this IPO for long-term investments. Nykaa’s commendable growth over the past few years, attributed to its large operations scale and a strong management team, has helped it create an industry itself.

Frequently Asked Questions

1. What was Nykaa’s net profit in FY21?

Nykaa reported a net profit of Rs. 61.94 crores in FY21.

2. When is this IPO’s listing date?

The listing date of Nykaa IPO is 11 November 2021.

3. When is the closing date for this IPO?

1 November 2021.

4. What was Nykaa’s revenue from operations as of FY21?

Nykaa’s revenue from operations reached Rs. 2,441 crores in FY21.