Indian Investment Firm Eyes Stake in Sugar

Indian woman putting on a Sugar lipstick
Preeti Bali / 2:02 pm / March 20, 2024

A domestic investment company focused on India, known for its backing of pre-IPO businesses, is reportedly in talks with early investors of a Mumbai-based cosmetics company to acquire a shareholding through a secondary transaction.

According to media reports, the deal is expected to be valued between INR 80-100 crore. If finalized, it would value the cosmetics company at approximately INR 2,900 crore (around $350 million) and potentially allow some of the company’s initial backers, including venture capitalists and angel investors, to partially exit their investments.

Cosmetics Brand Handles Pre-IPO Environment with Interest from Investors

The cosmetics brand is reportedly keen to secure an investor like the aforementioned firm, which has a history of acquiring stakes in companies on the verge of going public. The involvement of this investment company could potentially pave the way for the entry of other pre-IPO investors, according to a source familiar with the negotiations.

The specifics of the deal are still being ironed out. While a preliminary agreement has been drafted, the allocation of shares exiting investors will relinquish is yet to be determined.

For the investment firm, led by a former executive at a prominent consulting firm, this deal would add another consumer-oriented company to its portfolio. The firm has previously supported consumer-focused startups in various sectors. Its investment strategy is primarily focused on smaller and medium-sized publicly traded companies.

“We’ve recently observed significant interest from both domestic and international private equity firms for equity investments in our company,” a spokesperson for the cosmetics brand told a media outlet.

“A major investment is not now required, as the company turned a profit in December of last year. As a result, a few investment firms have initiated discussions to explore the possibility of joining our shareholder structure through a secondary share purchase,” he further explained.

From Internet to Everywhere: India’s Rising Cosmetics Giant

Founded in 2015, the cosmetics company began its operations as a direct-to-consumer brand with an online platform.Later on, it switched to an omnichannel business strategy and now operates in more than 550 Indian cities and over 40,000 retail locations. The company offers a range of products in various cosmetic categories.

In 2022, the cosmetics company secured $50 million in a Series D funding round led by an Asian investment arm along with several venture capital firms.

The cosmetics company’s sales neared the INR 500 crore mark in the financial year ending March 31, 2023. The company reported operating revenue of INR 420.2 crore in FY23, reflecting an 89% increase compared to INR 221.8 crore generated in the preceding fiscal year.

The company’s total revenue reached INR 428.3 crore, representing a 91.3% increase from INR 223.8 crore in the previous fiscal year. The company incurred a net loss of INR 76.2 crore in FY23, a slight increase from the INR 75.9 crore loss reported in the prior fiscal year.

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