Nykaa will spend its IPO money on setting up retail stores and repaying loans

• Nykaa IPO would consist of a fresh issue of equity shares worth ₹525 crore and a secondary issue of 4.3 crore equity shares.
• The total issue size will reportedly be ₹4,000 crore.
• A total of 17 investors will be shelling out a part of their shareholdings with Nykaa’s public issue.
• The company plans to expand its retail presence to boost organic growth and retention.

Nine-year old fashion and beauty e-commerce platform Nykaa has got the wheels rolling for its initial public offering (IPO), with the filing of draft red herring prospectus (DRHP) last night.

The Mumbai-based company ⁠— founded by the 55-year old Falguni Nayyar who has a net worth of ₹5,410 crore ($728 million), $4 to Forbes ⁠— has not yet publicly revealed the size of the IPO. However, a Moneycontrol $4, citing sources, that Nykaa aims to raise ₹4,000 crore through this issue.

The IPO would consist of a fresh issue of equity shares worth ₹525 crore and existing investors in the company ⁠— whose last reported valuation was $1.2 billion ⁠— will sell part of their stakes amounting to 4.3 crore equity shares.

Nykaa, in its DRHP, has revealed that the net processed would be used for five purposes.

Particulars	Amount from net proceeds	Total investment to be made
Investment in subsidiaries like FSN Brands or Nykaa Fashion to set up retail stores	₹35 crore	₹53.9 crore
Capital expenditure incurred by the company and fund setting up on new warehouses	₹35 crore	₹92.4 crore
Repayment of outstanding borrowing	₹130 crore	N./A
Expenditure on enhancing brand visibility and awareness	₹200 crore	₹200 crore
General corporate purpose*	N/A	N/A

*The amount utilised for general corporate purposes shall not exceed 25% of the Net Proceeds

Nykaa plans to set up new retail stores, with an built-up area of approximately 75,000 square feet, over the next three financial years.

It had over 73 physical stores and 18 warehouses, as of March 31, 2021.

The company has loans to repay to the tune of ₹187.4 crore from HDFC Bank, Kotak Mahindra Bank, Axis Bank and IDFC First Bank.

A total of 17 investors — both institutional and individual — will be shelling out a part of their shareholdings with Nykaa’s public issue.

Shareholders	Offered Shareholdings
Sanjay Nayar Family Trust*	Up to 4,800,000
TPG Growth IV SF Pte. Ltd	Up to 5,421,510
Lighthouse India Fund III, Limited	Up to 4,844,620
Lighthouse India III Employee Trust	Up to 51,530
Yogesh Agencies & Investments Private Limited	Up to 2,538,450
J M Financial and Investment Consultancy Services Private Limited	Up to 914,000

Kotak Investment Banking, Morgan Stanley, Bank of America Securities (BofA), Citigroup Global Markets India, ICICI Securities and JM Financial are the lead book running managers for this IPO. Link Intime is the registrar of the offer.

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