Omni-channel beauty retail chain Nykaa, also known as the Indian Sephora, has raised Rs 100 crore in its latest funding round led by TPG Growth. This is the middle market and growth equity investment platform of TPG, the US-headquartered global alternative asset firm. The deal valued the Mumbai-based startup at over Rs 5,000 crore.
That's a jump of around 70% in its valuation in just six months since it closed an investment of Rs 113 crore by Lighthouse Advisors through a secondary stake sale, The Economic Times reported. Sources in the know added that Nykaa is also in talks to bring other new investors like Steadview Capital through secondary transactions.
Confirming the news, Falguni Nayar, Nykaa's founder and CEO, told the daily that the company was now looking to push its new initiatives like Nykaa Man, the men's grooming business, fashion and apparel categories along with expanding the company's offline stores from 35 currently to 70 by March 2020. She added that Nykaa will start distributing their products more aggressively and widely across third-party offline stores. Its in-house brand contributes 10% to the company's overall sales at present.
Nykaa, founded in 2012, has raised around Rs 355 crore so far. Last April, Nykaa's existing investors, including Warburg Pincus, Hero Enterprise chairman Sunil Munjal's family office and consumer goods maker Marico's Mariwala family office, had ploughed in Rs 75 crore and the following month it raised Rs 165 crore in its Series D round.
The fund infusion will allow the company accelerate in a market segment that is expected to mushroom 10-fold to $3.5 billion by 2022. According to RedSeer Consulting, India's online beauty and personal care market was pegged at $300 million in 2018.
Nykaa, which reported revenues of Rs 570 crore in FY18 and achieved EBITDA profitability last year, is expected to more than double its net revenue to Rs 1,200 crore in the fiscal that ended yesterday.
It is already among the top vertical e-commerce players dominating the domestic beauty market since biggies Amazon and Flipkart have historically focussed on GMV-driving categories such as electronics and apparel, and lagged behind in this segment. In 2018, Nykaa was selling over 850 brands across makeup, skincare, hair care and wellness categories.
While Nykaa has also entered the apparel space with Nykaa Fashion, a separate website and app with 150 plus brands, according to Nayar, the category is "five years behind beauty" but here, too, the company intends to go big with curated brands. "It will be a more premium offering and not a mass approach", she added.
An IPO seems to be on the cards as well. "We are already on a path to prepare for an IPO. Before IPO... you need to be formally run and follow a bunch of processes. We also have appointed KPMG as our internal auditor. It (IPO) will happen by calendar 2020," Nayar had announced last September.
(Edited by: Sushmita Choudhury)