Lighthouse seals partial exits from India's Nykaa with 14x return
Lighthouse Funds has generated a more than 14x multiple on its investment in India-based beauty e-commerce platform Nykaa following two partial exits in the past fortnight.
The private equity firm is said to have invested USD 16m in Nykaa, having led an INR 1.13bn (then around USD 15.8m) round in September 2018. It made a partial exit through the company’s INR 53.5bn IPO in November 2021, selling around 4.9m shares for INR 1,124 apiece and generating proceeds of INR 5.5bn. Its stake fell to 2.04%.
Between November 10 and November 16, Lighthouse sold another 1.4% of Nykaa, or 39.7m shares. It completed two block trades, one on the National Stock Exchange of India at INR 171.75 per share and the other on the Bombay Stock Exchange at INR 175.13 per share, worth a combined INR 6.9bn.
The deal was completed at a gross multiple of 14x, according to a source close to the situation. The total value of the investment at the time was USD 199m – USD 158m realised and USD 42m unrealised. The overall gross multiple was 14.1x and the gross IRR was 101.7% in rupee terms.
Lighthouse followed up with another partial exit worth INR 3.35bn on November 22, selling 18.4m shares for INR 182 apiece.
With the post-IPO lock-up on Nykaa ending, Lighthouse wasn’t the only seller. TPG Capital, which led a USD 14.4m investment in the company in 2019 through its growth strategy, realised INR 6.1bn through the IPO, reducing its stake to 2.28%. The private equity firm also completed two block trades in the past fortnight, generating proceeds of INR 12bn.
Nykaa stock closed down 2% on November 23 at INR 171.65, giving the company a market capitalisation of INR 499bn. It is trading at an 85% deficit to the IPO price.
Nykaa was established in 2012 by Falguni Nayar, a banker-turned-entrepreneur and wife of Sanjay Nayar, chairman of KKR’s India business. They provided all the early-stage funding. External investors include Sharrp Ventures, Techpro Ventures, TVS Capital Funds, Steadview Capital, Max Ventures & Industries, and Fidelity, as well as Lighthouse and TPG.
The company describes itself as a lifestyle retail platform and a consumer brand. Its online presence comprises apps and websites, with 72.5m cumulative app downloads as of March 2022. Offline, it had 105 stores in 49 cities. About 4.6m different product lines are available from more than 4,500 local and global brands across beauty, personal care, and fashion.
Gross merchandise value (GMV) for the 12 months ended March was INR 69.3bn, up 71% year-on-year. The beauty and personal care segment was responsible for 8.43m annual unique transacting customers, 26.9m orders, and GMV of INR 49.9bn. This compares to 1.82m customers, 5.19m orders and INR 17.5bn in GMV for the fashion segment.
Revenue rose 55% to INR 37.7bn, with more than 90% of that coming from beauty and personal care and most of the rest from fashion. EBITDA increased 4% to INR 1.63bn, while net profit fell 33% to INR 413m.
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