FMCG major Hindustan Unilever Limited (HUL) is nearing a deal to acquire Peak XV Partners-backed Minimalist, a Jaipur-based skincare startup, in a Rs 3,000 crore ($350 million) deal, people briefed on the matter told Moneycontrol.
If the deal goes through, Minimalist would have seen its valuation increase from around Rs 630 crore (about $75 million) to Rs 3,000 crore ($350 million) in a span of about three years, largely on the back of increasing revenues and a stable profit profile. It will also be one of the largest deals in the direct-to-consumer (D2C) space in recent years, especially in the skincare industry.
In FY24, Minimalist generated a revenue of Rs 350 crore, an increase of 89 percent from Rs 184 crore clocked in FY23. During the same period, it also saw its profit more than double from Rs 5 crore to Rs 11 crore. Minimalist has been profitable for at least four years, data showed.
As things stand currently, Minimalist is commanding a revenue multiple of about 10X, significantly higher than 4-6X that similar direct-to-consumer (D2C) startups get during similar deals, thanks to its financial discipline.
A spokesperson for HUL, in response to Moneycontrol's queries, said: “In line with our business strategy, on an ongoing basis, we evaluate various strategic opportunities for the growth and expansion of our business. We will make appropriate disclosures whenever there is any material development that requires disclosure under applicable laws.”
Minimalist’s founders Mohit Yadav and Rahul Yadav did not reply to Moneycontrol’s queries.
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HUL is discussing a deal with Minimalist around three years after the company raised Rs 110 crore ($15 million) from Unilever Ventures, the venture investing arm of Unilever, the British company that also runs HUL in India, and others, to scale its business.
The deal comes at a time when FMCG giants are bringing new-age companies under their fold. While it helps large conglomerates tap the younger customer base, it helps startups to scale more rapidly by leveraging the network that FMCG players have created.
Not just HUL, other FMCG players such as Marico, ITC, Dabur have been bringing new-age brands like Beardo, Plix, Yogabar and several others under their fold and growing their digital business.
While these are strategic investments for large FMCG players, thanks to the tech capabilities and customer database they get in exchange, they have turned out to be slump sales for D2C startups in several cases because founders were unable to scale up their businesses beyond a point and those businesses ended up being available at a steep discount. Minimalist however, seems like a rare exception.
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