Will the FPO fund infusion solve Vodafone Idea’s problems?

Market regulator Securities and Exchange Board of India (Sebi) approved Nykaa’s Rs 4,000 crore initial public offering, CNBC-TV18 reported on Thursday.

The initial public offering (IPO) is likely to value FSN E-Commerce Ventures, which runs online marketplace for beauty and wellness products Nykaa, at over Rs 40,000 crore, the report said.

Fresh issue of equity and OFS

The IPO comprises fresh issue of equity shares worth Rs 525 crore and an offer for sale (OFS) of 43,111,670 equity shares by promoter and existing shareholders, according to draft red herring prospectus (DRHP).

As per the report, most of the Rs 4,000 crore raised from the IPO will be used to pay existing investors for selling their stakes.

Those selling shares in the OFS are — promoter Sanjay Nayar Family Trust and shareholders –TPG Growth IV SF Pte Ltd, Lighthouse India Fund III, Limited, Lighthouse India III Employee Trust, Yogesh Agencies & Investments, J M Financial and Investment Consultancy Services and some individual shareholders.

However, most of the investors are not cashing out fully, and will continue to retain some stake in the company post-IPO.

Promoter entity is selling less than 2% of its holding in the company and will retain majority stake of more than 51% post-IPO.

FSN E-Commerce Ventures, which is founded in 2012 by Falguni Nayar, is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers.

Earnings

The company has reported a net profit of Rs 61.94 crore for FY21 compared to a net loss of Rs 16.34 crore in FY20. Its revenue from operations jumped to Rs 2,441crore in FY21from Rs 1,768 crore in FY20.

It recorded nearly 57% CAGR in gross merchandise value (GMV) from FY19-FY21, and more than 48% CAGR in revenue terms from FY19-FY21.

Kotak Mahindra Capital Company, Morgan Stanley India Company, BofA Securities India, Citigroup Global Markets India, JM Financial and ICICI Securities have been appointed as merchant bankers to advise the company on the IPO.

The equity shares of the company will be listed on the BSE and NSE.