Beauty and personal care marketplace Nykaa, which plans to launch its initial public offering next week, on Friday announced the acquisition of home-grown direct-to-consumer (D2C) brand Dot & Key.
Nykaa had informed about the Dot & Key acquisition in its draft red herring prospectus (DRHP). “On September 28, 2021, our company acquired 51 percent of the outstanding equity shares of Dot & Key Wellness Private Limited through the subscription and purchase of equity shares,” it had said.
According to its DRHP, Nykaa acquired Dot & Key for about Rs 97 crore.
“Pursuant to the Dot & Key SSPA and Dot & Key SHA, our Company purchased 335,000 equity shares of face value of Rs 10 each from the existing shareholders of Dot & Key for a consideration of approximately Rs 469 million, and further subscribed to 357,143 equity shares of face value of Rs 10 for a consideration of approximately Rs 500 million,” it said.
This is the first acquisition by the company in the D2C segment. It had earlier in 2021 acquired fashion jewellery retailer Pipa Bella and women’s styling platform Twenty Dresses in 2019.
Founded by Kolkata-based Suyash Saraf and Anisha Saraf in 2017, Dot & Key is a new-age brand focused on providing solutions to skincare concerns. It offers premium skincare products such as serums, face masks, toners and cleansers. The brand has recently expanded into nutraceuticals under the brand ‘IKWI’. Ernst & Young LLP was the exclusive advisor to Dot & Key on the deal.
Commenting on the strategic development, Falguni Nayar, Founder and CEO, Nykaa said, “We are excited to bring Dot & Key into the Nykaa family in time to serve the demand in high quality skincare by Indian consumers. Dot & Key’s product range presents an exciting opportunity for Nykaa as it allows us to extend the brand’s reach to a larger landscape of consumers and enter the nutraceutical space as well.”
IPO plans
The recent acquisition by the company comes ahead of its IPO, which is slated to be launched on October 28. According to reports, the company plans to raise Rs 5,200 crore through its three-day IPO, which will involve a fresh issue of Rs 630 crore. The company is also looking at a secondary share sale of 43.1 million shares.
(Read here: Nykaa releases IPO launch date, plans to raise up to Rs 5,200 crore: Reports)
Existing investors of the company such as Sanjay Nayar, TPG, Lighthouse and Sunil Munjal will cash out from the company with the IPO. The company received approval for its IPO from the Securities and Exchange Board of India (SEBI) on October 14.
Founded in 2012, Nykaa initially focussed on selling beauty and personal care products for women online, however, in 2018 diversified to launch Nykaa Man and Nykaa Fashion, a vertical apparel marketplace that competes with Myntra and Ajio. The company also has a presence in the offline channel and operates about 73 stores across over 38 cities.
According to a Jefferies report, Nykaa ended FY21 GMV (gross merchandise value) at $540 million (approximately Rs 4,050 crore) with Rs 2400 crore of revenues and 6.5 percent EBITDA margin. The company, the report said, had 56 lakh annual transacting consumers and 170 lakh orders in FY21 in the beauty and personal care segment. The beauty and personal care vertical contributes about 84 percent to its revenue while the rest comes from fashion, said the report.
The D2C bet
The D2C segment, on a rise due to the pandemic, has witnessed consolidation of late and several companies have gone on to acquire new-age start-ups who sell primarily through e-commerce.
FMCG major Marico in July acquired Apcos Naturals Private Limited, the maker of ayurvedic beauty brand Just Herbs. In the highest transaction ever in the D2C segment, The Good Glamm Group, which owns D2C brand MyGlamm, acquired The Moms Co, a mother and beauty brand for Rs 500 crore. FirstCry’s Thriasio-style venture GlobalBees had acquired women focussed D2C brand andMe in August.
(Read here: FirstCry’s Thrasio-style venture GlobalBees acquires D2C startup andMe)
According to a 2020 report by Avendus Capital, beauty and personal care will be a $30 billion market by 2025, out of which digital-first brands could have a $10-15 billion share.
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