India’s technology sector is on a rise. After the successful opening of Zomato’s IPO, the top fashion retailing giant Nykaa is on the way to starting its initial public offering that may help the startup reach a valuation of above $4 billion, as per an internal report shared by the people familiar with the matter.
Nykaa is Getting Ready for Public Offering
Nykaa, India’s top e-commerce company for beauty, was founded by Falguni Nayar in 2012. Now, the startup is planning to file its draft red herring prospectus(DRHP) in the coming week. The information was leaked by the person who kept his identity anonymous because the matter is private. The same person also confirmed that the startup is planning to sell just 10% equity to raise over $400 million.
As per the CB Insights report, the firm was valued at $1.2 billion in the last valuation. But, it is almost impossible to calculate the current worth of the startup due to rapid change in the technology-based market. As per the latest report, the startup and its investors are targeting a $4 billion valuations before commencing its IPO. As per the Bloomberg January report, Nykaa targeted a $3 billion valuation.
But, it is not possible to predict IPO valuation by the above data. The final price will be decided by a process of discussions with investment bankers and potential investors. It may further change as per the market’s condition and other factors’ calculations.
When contacted, Nykaa did not reply to any query related to IPO timing and valuation specifications.
Technology-Based IPOs and Nykaa Growth
India’s technology industry has recorded exponential growth in 2021. Tech-based startups have raised billions of dollars from venture capital. And, many IPOs may start soon. Zomato has already become the first tech-based unicorn of India that made its stock market debut a few weeks back. The online food giant raised over $1.3 billion and its share surged more than 75% to help the money-losing business in reaching a whopping valuation of $14 billion.
The online insurance startup Policybazaar, fintech giant Paytm, and other tech firms are also starting their IPOs very soon. Paytm is set to start an IPO of Rs 16,600 crore, while Softbank-backed Policybazaar will file its draft red herring prospectus in the coming days, with more than a dozen technology startups aiming for its IPOs through next year.
Nykaa, founded in 2012 by Nayar, has established itself as India’s top e-commerce platform to buy beauty and fashion products. The startup also has its chain of physical outlets and recorded a revenue of $250 million in FY2020. The company is backed by global investors including TPG and Fidelity.
Founded by Falguni Nayar, Nykaa raised Rs 20 crore in series A funding in 2014 from Indra Banga and Harindarpal Singh Banga to reach a valuation of Rs 120 crore. TVS Capital invested Rs 59.6 crore in Nykaa at a valuation of approximately Rs 500 crore in 2015. Later, TPG acquired an 11.9% stake in the startup. In the series E5 round during January 2021, Nykaa reached a valuation of Rs 10,257 crore(around $1.5 billion), as per the Economic Times report.
The company also acquired jewellery brand Pipa Bella to expand its operations in April 2021. Currently, the startup promoter family holds a 51% share, while the 8.5% stake belongs to Nykaa’s employers.
As per internal sources, some existing investors will take a complete exit from Nykaa in a financial event that will be conducted before its IPO.
