Tag: nykaa

IPO craze continues; 2 public issues to open next week for subscription, BFSI News, ET BFSI

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The current month will continue to be a busy one for the primary market, as two companies –Tarsons Products and Go Fashion (India) Ltd — are set to float their IPOs next week to collectively raise Rs 2,038 crore. The three-day IPO of life sciences firm Tarsons Products will open on November 15 and conclude on November 17, while that of Go Fashion, which owns women’s wear brand Go Colors, will open for public subscription during November 17-22.

This comes after eight firms have successfully concluded their initial public offerings (IPOs) in November so far.

These eight firms are — One 97 Communication, owner of Paytm; FSN E-Commerce Ventures, which runs online marketplace Nykaa, Policybazaar‘s parent entity PB Fintech, Fino Payments Bank, Latent View Analytics, Sapphire Foods India, SJS Enterprises and Sigachi Industries.

So far in 2021, as many as 49 companies have floated their IPOs to raise Rs 1.01 lakh crore, according to an analysis of data with exchanges.

Apart from these, PowerGrid InvIT, the infrastructure investment trust (InvIT) sponsored by the Power Grid Corporation of India, mopped-up Rs 7,735 crore through its IPO and Brookfield India Real Estate Trust raised Rs 3,800 crore via its initial share sale.

The fundraising so far this year is way higher than Rs 26,611crore collected by 15 companies through initial share-sales in the entire 2020.

Such impressive fundraising through IPOs was last seen in 2017 when firms mobilised Rs 67,147 crore through 36 initial share sales.

Individually, Tarsons Products and Go Fashion are looking to raise Rs 1,024 crore and Rs 1,014 crore, respectively, through their public listing of shares.

Tarsons Products’ initial share sale comprises fresh issuance of equity shares worth Rs 150 crore an offer for sale of 1.32 crore equity shares by promoters and an investor.

As a part of the OFS, promoters — Sanjive Sehgal will offload up to 3.9 lakh equity shares, and Rohan Sehgal will sell up to 3.1 lakh equity shares — and investor Clear Vision Investment Holdings Pte Ltd will divest up to 1.25 crore equity shares.

The IPO price band has been set at Rs 635-662 a share, and at the upper end of the price band, the public issue is expected to fetch Rs 1,024 crore.

Proceeds from the fresh issue will be utilised towards paying debt, funding a part of the capital expenditure for the new manufacturing facility at Panchla in West Bengal, and general corporate purposes.

On Friday, Tarsons Products raised Rs 306 crore from anchor investors.

Go Fashion’s IPO comprises a fresh issue of equity shares aggregating up to Rs 125 crore and an offer for sale of up to 12,878,389 equity shares by the promoter and existing shareholders.

Under the OFS, PKS Family Trust and VKS Family Trust are going to offload 7.45 lakh equity shares each, Sequoia Capital India Investments will sell up to 74.98 lakh shares, India Advantage Fund S4 I will divest up to 33.11 lakh shares and Dynamic India Fund S4 US I will sell up to 5.76 lakh shares.

Currently, PKS Family and VKS Family Trust hold 28.74 per cent stake each in the company, Sequoia Capital holds 28.73 per cent stake, India Advantage Fund has a 12.69 per cent stake, and Dynamic India Fund owns a 1.1 per cent stake in the firm.

The company has fixed a price band of Rs 655-690 apiece for the issue, and at the upper end of the price band, the IPO is expected to garner Rs 1,013.6 crore.

Proceeds from the fresh issue will be used to fund the rollout of 120 new exclusive brand outlets, to support working capital requirements and general corporate purposes.

The equity shares of both companies will be listed on BSE and NSE. PTI SP BAL BAL



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Sensex ends Samvat 2077 38% higher, best in 12 years, BFSI News, ET BFSI

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MUMBAI: Investors on Dalal Street were richer by about Rs 99 lakh crore during Samvat year 2077 that ended on Tuesday, riding on strong across-the-board buying that also led to a 38% jump in the sensex to its current close at 59,772 points. The rise was the best in the last 12 years while the gain in investors’ wealth—in terms of BSE’s market capitalisation—was the best ever, official data showed.

The year ended with BSE’s market cap at Rs 266 lakh crore ($3.6tn), which elevated India to the sixth largest market spot in the world in terms of market value. Samvat 2077—the calendar followed by mainly the trading community on Dalal Street—will go down as one of the best years in terms of returns and the regularity with which the leading indices hit new all-time highs, even though the economy struggled due to the ongoing Covid-induced pandemic, market players said.

Metals, banking & financial services, and software exporters led the rally while pharma and FMCG stocks witnessed muted gains in prices. The gains came on the back of nearly Rs 1.25 lakh crore worth of net buying of stocks by foreign institutional investors, while domestic institutions, which include mutual funds, insurance companies, banks and others financial companies, were net sellers at about Rs 34,700 crore, CDSL and BSE data showed.

The year will also be marked as the year when new age consumer-facing tech-enabled companies, for years being privately held by a handful of private equity-venture funds, started getting listed. The trend, often called private going public by merchant bankers and analysts, was led by food delivery company Zomato and soon followed by CarTrade. A host of such companies, that include FSN E-commerce (Nykaa), PB Fintech (Policybazaar) and One 97 Communications (PayTM), are now in various stages of going public during Samvat 2078.

Sensex ends Samvat 2077 38% higher, best in 12 years

According to Yesha Shah, head of equity research, Samco Securities, Samvat 2077 could be termed as the year of unicorns and technology companies. Technology adoption, which was formerly limited to certain sectors, has now become mainstream, Shah wrote in a note to clients.

“With the advent of e-commerce, (the) move to online prompted major alterations in sectors such as travel, hotels, restaurants, entertainment, and education. With increased internet access, smartphone penetration, and 5G modernization in India, the user base of Indian tech-driven fintech, edtech, healthtech and e-commerce start-ups is rapidly growing. This trend is backed up by India’s growing list of Unicorns, which has resulted in the nation having the world’s third largest start-up ecosystem. As a consequence, it was not unexpected that 2021 provided an appropriate opportunity for numerous such start-ups to make their public market debuts,” Shah wrote.

The year’s rally on D Street also catapulted some Indians to the club of the richest people in the world and Asia. The list includes Mukesh Ambani of Reliance Industries, Gautam Adani of Adani Group and Radhakishan Damani of D-Mart.



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IPO financing costs double as 5 IPOs set to hit market, raise Rs 31,000 crore, BFSI News, ET BFSI

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After the Reserve Bank of India capped the borrowing from NBFCs for IPO subscription to Rs 1 crore per borrower, investors have been hit by doubling interest rates in the last two months.

Funding rates have shot up as many large-sized IPOs are scheduled within a short span of time. Interest rates have risen to 12-13 per cent in the last two months as liquidity has tightened in the system. Liquidity is further seen going down in the next couple of weeks and funding rates may rise further. With five IPOs scheduled to hit the market by November 3 and aiming to raise Rs 31,000 crore, the demand for funds is bound to go up amid a liquidity crunch.

Five IPOs

Five companies are looking to mop up over Rs 31,000 crore cumulatively between October 28 and November 10. Industry players expect Nykaa to be the biggest draw. Its IPO is expected to generate bids between Rs 80,000 crore and Rs 90,000 crore in the HNI category.

NBFCs issue seven-day commercial papers (CPs) to meet this funding requirement. The CPs are issued at 5.5 to 6.5 per cent. Industry players said the huge borrowing requirement had also led to a 100-200 basis points increase in CP rates.

Bajaj Finance, Kotak Securities, IIFL, JM Financial, and Motilal Oswal are among NBFCs that are looking to borrow or have borrowed from the CP market to lend to HNIs to apply for IPOs of Nykaa and others.

Rising costs

With the increase in funding rates, the cost per share has gone up drastically for wealthy investors.

For instance, at 7% for seven days, the cost for one share of Nykaa comes at around Rs 151 for 100 times HNI portion subscription. At 11%, the cost will go up

to Rs 237 per share, and at 13%, it will be Rs 280 per share. This means investors will make money only if the Nykaa lists with a premium of more than Rs 280 per share if one borrows at 13%.

The IPOs of Nykaa and PB Fintech are currently traded at a grey market premium of Rs 670 and Rs 220 apiece, respectively.

Raising funds

While the Nykaa IPO will hit the market on Thursday to raise Rs 5,352 crore, the PB Fintech IPO will open for subscription on Monday, November 1, to raise

Rs 5,710 crore. There is demand for nearly Rs 1 lakh crore from high-net worth investors for these two IPOs against the availability of Rs 50,000-60,000 crore at one time

NBFCs are readying a war chest of close to Rs 2 lakh crore to lend to high net worth individuals (HNIs) for their IPO bets.



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SoftBank-backed Snapdeal weighs $400 million IPO, BFSI News, ET BFSI

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Indian e-commerce retailer Snapdeal Pvt is considering an initial public offering that could raise about $400 million, joining a growing list of startups preparing to tap capital markets as the nation’s digital economy booms.

The company, which counts SoftBank Group Corp. among its investors, is speaking with advisers about a potential listing in Mumbai that could value it at as much as $2.5 billion, the people said. An IPO could take place as soon as next year, they said, asking not to be identified because the details aren’t public.

Discussions are still at an early stage, and the firm could decide not to proceed with the plan, the people said. Representatives for Snapdeal and SoftBank declined to comment.

Snapdeal, based in the New Delhi suburb of Gurgaon, was once one of the country’s top three e-commerce firms along with Flipkart Online Services Pvt. and the Indian unit of Amazon.com Inc. Founded in 2010, it offers more than 60 million products across 800 categories on its platform and delivers to more than 6,000 cities and towns across the country, according to its website.

Four years ago, Snapdeal walked away from a potential merger with Flipkart, which would have united the two local-e-commerce companies against Amazon. Since then, Flipkart sold a controlling stake to Walmart Inc. and is now progressing towards its own IPO.

The amount raised through IPOs in India so far in 2021 has already surpassed the total gathered in the last three years. The pipeline for the rest of the year includes payments service provider Paytm, online insurance platform Policybazaar and e-commerce beauty startup Nykaa.



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Oyo aims for India IPO in 2021, BFSI News, ET BFSI

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Oyo Hotels and Homes will soon join the list of startups launching an initial public offering (IPO) in the country.

Internally, the hospitality company has set a timeline of September for filing its IPO prospectus and wants to be a public company before the calendar year ends, people aware of the development said.

Oyo has initiated talks with multiple bankers including JP Morgan, Citi and Kotak Mahindra Capital to manage its public issue, they said.

“Work has begun and some bankers have been finalised,” a person aware of the matter told ET. “They are aiming to file the draft red herring prospectus (DRHP) by September.”

Another person said, “Directionally, they are moving towards an IPO but many details are yet to be finalised, including the offer size.”

A spokesperson of Oyo declined to comment.

Oyo is seeing a revival in business in markets such as India and Europe as the number of Covid-19 cases have been falling and vaccination rate improving. Oyo told ET last month that it was seeing stronger recovery in Europe on the back of higher vaccination rates and that India would also reflect the same once more people are vaccinated, at least once.

Currently, 43% of Oyo’s revenue comes from India and Southeast Asia while 28% comes from Europe and the rest from other global markets. The company was forced to cut down its operations in markets like the US and China amid the virus outbreak. In India, it fired a chunk of its workforce as Covid-19 hit its business hard.

Its IPO plans come at a time when the Indian public market seems to be bullish on startup IPOs following Zomato’s public offer.

Paytm, PolicyBazaar, Nykaa, Mobikwik and CarTrade are in various stages of going public in India after having filed their DRHP over the last few months.

ET had last month reported that Oyo had secured a $660-million debt financing from global institutional investors to service its existing loans. Wall Street investors like Fidelity, Citadel Capital Management and Varde Partners have subscribed to Oyo’s TLB, also referred to as Term B Loan.

The hotel aggregator is also in talks with Microsoft for financing.



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Post-IPO, Nykaa founder Falguni Nayar will remain in the saddle, BFSI News, ET BFSI

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Omnichannel beauty retailer Nykaa will not only be the first woman-led Indian unicorn to launch an Initial Public Offering (IPO), but Falguni Nayar, its founder and CEO, is also expected to have strong control over the company compared to founders of other startups such as Paytm, PolicyBazaar, Zomato, Mobikwik and CarTrade.

Including Nykaa, six Indian startups have filed their draft prospectus with markets regulator, the Securities and Exchange Board of India (Sebi). Food delivery app Zomato has already made a stellar stock market debut.

Falguni, a banker-turned-entrepreneur, will have – as a promoter of the company – the right to nominate up to “50% of the number of directors on the board as well as nominate at least one such nominee director as member on each statutory or other committee constituted by the board…,” according to the IPO draft papers.

The option of exercising such rights comes at a time when most startup entrepreneurs are often left with less than 10% stake in their ventures by the time they list publicly.

This will be valid as long as Nykaa’s promoters hold more than 25% in the company.

As long as Falguni Nayar, husband Sanjay Nayar – the chairman of private equity major KKR India, the Nayar Family Trust and Sanjay Nayar Family Trust continue to be classified as promoters, they can nominate up to one-third of the board of directors as well as nominate at least one such nominee director as a member on a committee constituted by the board.

Falguni, Sanjay and their children own over 53% stake in Nykaa parent FSN E-commerce Ventures.

Nayar, a source told ET, will retain majority control even after the IPO.

The company will continue to be an inventory-led ecommerce platform as well. Foreign-owned ecommerce platforms are not allowed to have inventory models in the country and have to operate as a marketplace, like Walmart-owned Flipkart and Amazon India.

Further, Nykaa’s promoters will have the right of first refusal when a shareholder with less than 3% stake sells shares.

These rights are an outcome of the majority shareholding Nayar and her family hold as promoters.

“For a majority stakeholder, these broad rights can be accorded as per the laws. However, she is the only founder among the top-tier founders to have such a stake in the firm going into the IPO,” a senior industry executive who has worked with startups on IPO regulations said.

“In addition to the above, Sanjay Nayar and Falguni Nayar, as long as each of them is a director, is not liable to retire by rotation for as long as their total number does not exceed one-third of the total number of directors, excluding independent directors, or such other limit as may be permitted under applicable law,” the draft prospectus added.

Revival in sales
Meanwhile, Nykaa has made a full sales recovery to pre-Covid-19 second wave levels at the end of last month, a person aware of the matter said.

The overall impact on monthly sales was relatively less during the second wave compared to the first.

Last year, Nayar had told ET that being an omni-channel retailer helped it during the Covid-19 outbreak even as online sales recovered faster. She told ET that 85%-90% of its customers were registered in Nykaa database and that it was able to cater to them through hyperlocal, and in some cases by taking orders over the phone as well.

“By the end of last month, sales were back to pre-second wave levels. Overall, the expectation is that this year would be another good year for growth,” the person said.

Nykaa sells several third-party beauty and personal care brands but is also building its own set of private labels across categories.

Its fashion business is now about 20% of overall sales, sources aware of the matter said.

For now, Nykaa’s in-house labels are relatively a smaller vertical.

“Nykaa is seeing recovery across the board but there is a sharp rebound in tier 2 and tier 3 cities. Non-metros seem to be less impacted in terms of consumption for Nykaa users,” this person added.

In the DRHP, Nykaa said sales from tier 2 and tier 3 cities contributed 64% in FY21 compared to 59% in FY20.

It has also cited current draft ecommerce proposals as a risk-factor as the proposals could impact its operations.

Nykaa clocked total revenue of Rs 2,452.6 crore in FY21 compared to Rs 1,777.8 crore in FY20, a growth of 38%.

Its net profit stood at Rs 61.96 crore in FY21 compared to a net loss of Rs 16.34 crore in FY20.

Its gross merchandise value jumped by over 50% to almost Rs 4,046 crore in FY21.



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