Beauty Startup Nykaa's IPO Over-Subscribed By 82 Times

TPG-backed fashion e-commerce platform Nykaa's initial public offering drew bids worth $32.55 billion as it was oversubscribed by nearly 82 times on Monday, signalling strong investor demand for the latest startup in the country to pursue a domestic stock listing.

FSN E-Commerce Ventures, the company which owns the Nykaa brand, priced the 53.52 billion rupee IPO at a range of 1,085 rupees to 1,125 rupees per share, giving it a valuation of as much as $7.11 billion.

The company received bids for 40 times the number of shares it plans to sell to anchor investors in its IPO, a source told Reuters last week. Investors included Blackrock Capital Group and asset manager Fidelity.

Nykaa's IPO is the latest in a year which has seen over 40 companies list on the domestic stock exchanges, the highest amount since at least 2016, as firms attempt to cash in on a market that has scaled record highs on the back of a decline in COVID-19 cases, a re-opening of the economy and ample liquidity.

"Nykaa is uniquely positioned... (with) a market share of almost 35% in the online beauty and personal care market," said Sneha Poddar, associate vice president of research, broking & distribution at Motilal Oswal Financial Services Ltd, adding it is well placed to target huge growth potential.

India's beauty and personal care market is estimated to grow to about $28 billion by 2025, according to research firm RedSeer.

Launched in 2012, Nykaa grew popular by selling cosmetics and grooming products on its website, apps and through its physical stores, before expanding into fashion, pet care and household supplies. Its investors include film actresses Alia Bhatt and Katrina Kaif.

Unlike most startups, Nykaa has also achieved profitability, posting a consolidated net profit of 618.5 million rupees for the year ended March 31, 2021.