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PE firm Lighthouse backs beauty e-tailer Nykaa as TVS Capital exits
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Mid-market private equity firm Lighthouse Advisors Pvt. Ltd has added beauty e-tailer Nykaa to its portfolio of consumer-focussed companies, paving the way for existing investor TVS Capital Funds to make an exit.

According to an official statement, the Mumbai-based PE firm has invested Rs 113 crore ($15.7 million) via an affiliate, Lighthouse India Fund III Ltd, through a secondary transaction to become a stakeholder in Nykaa. It is not clear whether any primary infusion was involved. 

TVS Capital Funds, via TVS Shriram Growth Fund, had invested in Nykaa in 2015 and 2016 as part of the company’s Series B and Series C equity funding rounds.  

“We are excited to welcome Lighthouse to our shareholder base as we launch into our next phase of growth,” said Nykaa founder Falguni Nayar. “Lighthouse will bring to bear their expertise in the retail sector propelling Nykaa to even greater heights.”

Nykaa had in May this year closed its Series D round of funding at Rs 165 crore ($24 million), receiving money from its existing investors including Hero Group’s chairman Sunil Munjal, the family offices of consumer goods maker Marico’s Harsh Mariwala and private equity investor Warburg Pincus. 

The round included both primary investment as well as the exit of early-stage investors which the firm did not name.

In April, a report in The Economic Times stated that the firm had raised $11.32 million (Rs 75 crore) from its existing investors, including those mentioned above and some high net-worth individuals. 

The report also said that three of the firm’s investors, including TVS Capital Funds, had sold part of their stakes. 

The round valued Nykaa at $453 million (Rs 3,000 crore) and brought in about Rs 95 crore to some existing shareholders, ET had reported.

Nykaa 

Run by FSN E-Commerce Ventures Pvt. Ltd, Nykaa was founded in 2012 by investment-banker-turned entrepreneur Nayar, who was a former managing director at Kotak Mahindra Capital. The online marketplace sells products across categories ranging from skincare, hair care, fragrances, bath and body, and luxury products for both women and men.

For the financial year 2017-18, Nykaa reported net revenue of Rs 570 crore as compared to Rs 214 crore in the previous fiscal. It did not disclose profit and loss figures but claims that it will turn profitable in the current financial year. 

Since 2015, the firm has been operating on an omnichannel model and currently has 17 stores across the country in two formats — Nykaa Luxe and Nykaa On Trend. The company also offers its own in-house beauty products.

Nykaa has been expanding its offline presence in the country and it aims to open 55 stores by March next year. It claims to offer over 850 brands and 100,000 products.

With brands like M.A.C, Bobbi Brown, Clinique, Estee Lauder and Smashbox Cosmetics on the online platform, the luxury vertical accounts for 15% of total revenue for Nykaa.

In 2014, Nykaa raised $3.4 million from HNIs and non-resident Indians and in October 2015, it secured Rs 60 crore ($9 million) led by TVS Capital. Techpro Ventures, the family office of Atul Nishar (former Hexaware promoter) and the family office of Marico chairman Harsh Mariwala, among others, also invested in this round.

In September 2016, Hero Group’s Sunil Munjal led a $12-million round and in December 2016, Max Ventures, part of industrialist Analjit Singh’s Max Group, put in an estimated Rs 16 crore.

Another player in the online beauty products segment is Purplle.com, run by Mumbai-based Manash Lifestyle Pvt Ltd. The firm had secured $6 million in July 2016 in a Series B round led by JSW Ventures with participation from existing investors Blume Ventures and IvyCap Ventures.

Nykaa and Purplle also compete with horizontal e-commerce players such as Snapdeal, Flipkart, Myntra and Amazon.

Lighthouse

The PE firm focuses on consumer-centric sectors such as healthcare, food and beverages, personal care, building materials, consumer durables, logistics and financial services.

In June, it invested in Tynor Orthotics Pvt. Ltd, which makes artificial support devices for various body parts.

Earlier this year, it marked the first close of its third India-dedicated fund at $150 million (Rs 974 crore), and was aiming to achieve the final close at $200 million by June.

Its other portfolio firms include laminates maker Stylam Industries, quick service restaurant (QSR) chain Wow! Momo and value retailer V2 Retail.

It has also struck few exits over the past years.

In May, Lighthouse had walked away with a bountiful harvest from its four-year-old investment in snacks maker Bikaji Foods International Ltd.

Before that, Lighthouse’s last exit was in February 2017 when it had sold its stake in Unibic Foods to Peepul Capital.

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