FSN E-Commerce Ventures Private Limited, a digitally native consumer technology platform, has filed its Draft Red Herring Prospectus with market regulator Sebi. The company has a diverse portfolio of beauty, personnel care and fashion products, including its owned manufactured brand products, under its two business verticals – Nykaa and Nykaa Fashion.

The initial public offer comprises a fresh issue of equity shares aggregating up to Rs. 5,250 million, and an offer for sale of up to 43,111,670 equity shares being offered by the selling shareholders. The offer will also include a reservation of equity shares for purchase by eligible employees. The key selling shareholders include some of the private equity investors like TPG Growth and Lighthouse Funds, and some individual shareholders. However, most of the investors are not cashing out fully, and will continue to retain some stake in the company post-IPO. One of the promoter and promoter group entities is also selling a few shares in the offer for sale, however this only amounts to less than 2 per cent of the total promoter and promoter group shareholding. The promoter and promoter group will continue to hold more than 51per cent of the company’s shares.

Amongst the new age consumer internet companies, Nykaa is the one of the only profitable ones, and has reported net profit of Rs. 619.45 million in the financial year 2021. The company has also been EBITDA positive consistently over the last 3 years.

The IPO is likely to value the company at around $5.0bn-$5.5bn.

The company plans to use the proceeds from the IPO for expansion, by setting up new retail stores and establishing new warehouses. It also aims to retire some of its debt, which should bring down interest costs, and further shore up its profitability. Other goals include deploying the proceeds of the IPO for marketing and promotional activities, to focus on strengthening its 13 owned brands such as “Nykaa Cosmetics”, “Nykaa Naturals” and “Kay Beauty”, along with establishing and promoting new brands.