The Zomato IPO is on its way to becoming a legendary tale for years to come, having evolved into the greatest event that has happened in the start-up sector in recent times. This year has seen many firms opting for, or mulling over, an initial public offering (IPO). Ahead of its IPO, fashion e-retailer Nykaa announced on Monday that it has converted from a private company to a public one, according to regulatory filings.
With this announcement, the nine-year-old start-up has joined CarTrade, MobiKwik, Paytm, and PolicyBazaar in following down this route. The aforementioned start-ups will be going public soon as well.
Nykaa, founded by Falguni Nayar in 2012, is a big name in online fashion. It was valued at $1.8 billion in November 2020, and has profited much in recent times, logging no less than 55 million monthly visits and listing over 1200 brands, having a registered user base of over 15 million. It has six warehouses in the country and registered operating revenue of ₹1,850.10 crores last year, an increase of 57%, and an annual loss of ₹23 crores in FY20, while its EBITDA margins grew from 2.95% to 4.61%.
In some ways, changing its status to a public company from a private one is a good move on Nykaa’s part. After all, public companies do not have the restrictions placed on private ones, like prohibition from transferring their shares to the public (like their public counterparts), finding it difficult to gain external financial support and greater risks and liabilities of shareholders.
Nykaa has already managed to create a strong foothold in the fashion e-commerce market, competing heavily with the likes of Amazon and Flipkart. Thus, converting to a public entity can help it take the next step, especially since competitor Flipkart is also looking to launch an IPO soon.
From now on, the holding company of Nykaa will be called FSN e-commerce Ventures Limited, and not FSN e-commerce Ventures Private Limited. This comes after a special resolution passed by the company’s shareholders on July 16.
In its filings to the Registrar of Companies (RoC), which is responsible for taking care of the registration of companies, Nykka said that it was proposing to undertake an initial public offer of its equity shares of the face value of Re 1 each by way of fresh issuance of equity shares, “…and/or an offer of sale of such a number of equity shares by certain of the existing and eligible shareholders of the company. The equity shares are proposed to be listed on one or more of the recognized stock exchanges in India.”
This seems to be the final step ahead of the filing of Nykaa’s Draft Red Herring Prospectus (DRHP), likely in a few days, with SEBI. It is reported that it is seeking to raise $700-750 million in the IPO, coming to be valued at $4-5 billion.
