Bulge-bracket private equity firm TPG Capital is close to investing $30 million (Rs 213.50 crore) in online beauty and skin care retailer Nykaa, according to people aware of the development.
The deal, if it goes through, is expected to value the Mumbai-based company at about Rs 4,500 crore, up from Rs 3,000-3,500 crore last year, they said.
In April last year, Nykaa had raised Rs 75 crore from its existing investors, a list that includes Hero Enterprise chairman Sunil Munjal’s family office, consumer goods maker Marico’s Mariwala family office, and Dalip Pathak, special limited partner at private equity firm Warburg Pincus. That capital infusion was part of a larger Rs 160 crore equity financing round, which also had a secondary component.
Excluding the investment by TPG, Nykaa has raised Rs 255 crore till date.
Additionally, in September last year, ET had reported that Lighthouse India Fund III Limited, an affiliate of consumer-focused private equity manager Lighthouse Advisors, has invested Rs 113 crore in Nykaa for a minority stake through a secondary share sale.
The secondary share transaction had given exit to TVS Capital Funds, an early backer of the seven-year-old company. ET’s email query to Nykaa remained unanswered till press time. TPG Capital declined to comment.
Nykaa, founded by former investment banker and IIM-A alumnus Falguni Nayar, has an estimated 33% market share of the country’s online beauty business.
The company clocked Rs 570 crore in net revenue in FY18, up from Rs 214 crore a year earlier. The firm also claims to be EBITDA positive for the last two quarters and is on track to grow 100% in revenues in FY19, potentially taking it beyond the Rs 1,000-crore revenue mark.
Nykaa has been expanding into new categories like apparel, as it looks to take on the likes of Flipkart’s Myntra in the segment. The company has been pushing its private label aggressively where the margins are higher.
For TPG, which manages assets of about $84 billion, an investment in Nykaa could be its third such in India’s consumer internet sector. Last year, TPG Growth, the $13.2-billion mid-market and growth equity platform for the global alternative asset major, led a $100-million funding round in online ticketing portal BookMyShow.
Additionally, the PE firm, which appointed former Twitter executive Shailesh Rao as the India and Southeast Asia head for TPG Growth in September, also counts eyewear solutions company Lenskart among its portfolio in India.
As per a report released by consulting firm RedSeer Consulting last year, the domestic online beauty and personal care market is expected to cross $3.5 billion by 2022 from about $300 million in 2017.
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