E-cosmetics unicorn Nykaa raises funding from Fidelity via secondary deal; investors exit partially

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November 26, 2020 6:43 PM

While Nykaa directly competes with Purplle, it also has horizontal players such as Amazon and Flipkart apart from LimeRoad and Myntra in the fashion e-commerce category among its competitors.

The journey of a consumer in terms of awareness is shifting from TV to digital avenues, with 33% beauty consumers engaging digitally every day, 50% every week and 93% every monthA bigger source of debate is whether the BPC industry will retain its pre-pandemic DNA in the long term.

Hero Enterprises’ Sunil Kant Munjal-backed omnichannel retailer of beauty and wellness products Nykaa has raised an undisclosed investment from Boston-based asset management firm Fidelity Management & Research, the company announced on Thursday. The funding has been made through a secondary transaction that facilitated partial exit to its early investors and exit for employee ESOPs. Launched in 2015 by the former managing director at Kotak Investment Banking — Falguni Nayar, Nykaa had raised Rs 25 crore from TVS Shriram Growth Fund in 2015. Its angel investors included corporate lawyer and Founder and Managing Partner of AZB & Partners Zia Mody who put Rs 1 crore in 2014. Other investors included TPG Growth, Lighthouse Funds, Sharrp Ventures, Steadview Capital, Bollywood actors Katrina Kaif and Alia Bhatt.

Nykaa had raised Rs 166 crores from Steadview Capital in March this year that valued the company at more than $1.2 billion. It recorded Rs 1,860 crores in revenues for FY20 with EBIDTA of Rs 94 crores. The company said its revenues are likely to grow at around 40 per cent on a consolidated basis for FY21. “Their investment in a private company in India is testament to the strength of our brand and business model,” said Nayar. Nykaa’s revenue from operations jumped to Rs 1,159.32 crore in FY19 from Rs 555.10 crore in FY18 and had turned profitable in FY19 with Rs 2.3 crore in net profit.

Also read: Sonu Sood’s job search app Pravasi Rojgar to form JV with Singapore’s Temasek; raises Rs 250 crore

While Nykaa directly competes with Purplle, it also has horizontal players such as Amazon and Flipkart apart from LimeRoad and Myntra in the fashion e-commerce category among its competitors. The company had a growth rate of 78 per cent in FY19 compared to the preceding year, as per Statista. The digital beauty and personal care market in India is estimated at Rs 6000 crore with 6 per cent share in the overall market, according to RedSeer. The Indian cosmetics market is likely to grow from $6.5 billion in size in 2017 to around $20 billion by 2025 at a CAGR of 25 per cent while the global market will be around $450 billion by 2025.

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