The fundraising was part of a ₹170 crore investment round, which was a mix of primary and secondary transactions that brought in about ₹95 crore to some existing shareholders.
Existing investors including 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, led the investment round, along with other existing and new high net worth individuals.
This is the fourth round of fund-raising by Nykaa, which last raised about ₹100 crore in 2016 from Max India, the Sunil Munjal family office and Harsh Mariwala.
With this, the total capital raised by the firm stands at about ₹255 crore. This investment comes almost four months after Nykaa sought to initially raise between ₹250 crore and ₹300 crore at a valuation of ₹3,000 crore, according to one person.
“The reason to settle for a smaller primary component has been Nykaa’s insistence on maintaining the valuation at ₹3,000 crore. However, their operational Ebitda performance has been strong enough to help them command the valuation and enable investor interest,” said an investor familiar with the transaction.
“We are already Ebitda-breakeven and we intend to be profitable by FY19 at a company level,” Falguni Nayar, CEO of Nykaa, told ET, confirming the total of the investment round. “If all goes well for Nykaa, we may need to raise only a small amount of capital in future because from here on, we only need money to fund our working capital growth.”
At least three investors in the company are said to have sold part of their stakes in this round, including TVS Capital Funds, which invested in Nykaa in 2015. Exiting Nykaa at this valuation would be beneficial for the private equity firm, which is currently raising its third fund of ₹1,000 crore. TVS Capital did not respond to queries by ET until the time of going to print. Nayar declined to comment on investor exits in this round.
Nykaa owns the lion’s share of the online beauty market at 33% and has been growing at a strong pace, having clocked ₹570 crore in net revenue in FY18 from ₹214 crore a year earlier.
The FY18 revenue is unaudited and may be revised when the audited report is submitted. For Nykaa, a large part of the focus will be on expanding its offline presence from 17 stores currently to about 55 stores by FY19-end.
The funds will also be used to enhance retail distribution so as to boost its private label, which currently forms less than 10% of the revenue pie.
“We first started working on distribution for our private labels last year and this year we are investing to build that out. We are selling our private labels through physical retail distribution and it is present across 800 stores,” said Nayar.
The domestic online beauty and personal care market is expected to cross $3.5 billion by 2022 from about $300 million in 2017, according to RedSeer Consulting.