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Exclusive: Beauty e-tailer Nykaa raises $14 million from TPG Growth; valuation jumps over $700 million

Hero Enterprises’ Sunil Kant Munjal-backed omnichannel retailer of beauty and wellness products Nykaa has raised $14 million (Rs 100 crore) from the middle market and growth equity fund TPG Growth in the latest round of funding.

Launched in 2012 by Falguni Nayar, former managing director at Kotak Investment Banking, Nykaa allotted 2,83,287 shares, the documents showed.

Hero Enterprises’ Sunil Kant Munjal-backed omnichannel retailer of beauty and wellness products Nykaa has raised $14 million (Rs 100 crore) from the middle market and growth equity fund TPG Growth in the latest round of funding. The new round takes Nykaa’s valuation to $724 million, showed regulatory filings sourced by business signals platform Paper.vc. Horizontally it competes with marketplaces such as Amazon and Flipkart apart from LimeRoad and Myntra in the fashion e-commerce category.

Nykaa’s chief marketing officer Hitesh Malhotra said that the company will announce the development in a day or two including the planned allocation of the capital raised.

Avendus Capital was the financial advisor to the transaction.

“Nykaa appears to be on track to joining Asia’s unicorn ranks. TPG Growth’s investment gives it a spectacular jump in the post-money valuation of Rs 5027 crore ($724 million). The raise comes after a long hiatus in institutional investment in the cosmetic platform,” Paper.vc Founder Vivek Durai told Financial Express Online. The company will probably hit the unicorn status with its next round of funding.

Launched in 2012 by Falguni Nayar, former managing director at Kotak Investment Banking, Nykaa allotted 2,83,287 shares, the documents showed. Apart from Sunil Kant Munjal who invested Rs 30 crore in 2016 in the startup, its other backers include TVS Shriram Growth Fund (invested Rs 25 crore in 2015) and a host of angel investors such as corporate lawyer and Founder and Managing Partner of AZB & Partners Zia Mody who put Rs 1 crore in 2014.

Both the hiatus and the extraordinarily high valuation are interesting given Nykaa’s financial performance. However, the valuation can be explained given its recent numbers. “The startup narrowed its losses to Rs 28.2 crore for FY 2018 compared to Rs 36.3 crore for the previous year. Nonetheless, these losses pale in comparison to its revenue. Nykaa’s revenues jumped from Rs 214 crore in FY 17 to Rs 578 crore in FY 18,” Durai added.

Nykaa was last valued at reportedly around $400 million. It raised near $16 million from Lighthouse India Fund in September 2018. The new round takes the total amount raised by the startup to $107.5 million, as per deals tracker Crunchbase.

The Indian cosmetics market is expected to grow from $6.5 billion in size in 2017 to around $20 billion by 2025 growing at 25 per cent CAGR whereas the global market will be around $450 billion by 2025. Hence, India is expected to contribute 5% of the global market, said an industry report by RedSeer Consulting.

Nykaa directly competes with Mumbai-based Purplle that has raised $9.6 million so far from a clutch of investors including IvyCap Ventures, Blume Ventures, Brand Capital etc.

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