American asset management giant Fidelity has pumped an undisclosed amount of funding in online beauty and cosmetics marketplace Nykaa. However, this investment has been done through a secondary transaction, resulting in the partial exit for existing investors.
What is a Secondary transaction?
Secondary shares or transaction takes place when a new investor/s buys the shares from existing investor/s at a fixed price. Secondary transactions are not aimed at creating new shares and do not serve to finance the company. They are primarily aimed at giving complete or partial exit to existing investors and employees.
Fidelity’s investment has come barely a month after Bollywood’s leading actresses Katrina Kaif and Alia Bhatt made undisclosed investments in the Mumbai based company. These two Bollywood actresses also invested in the company via secondary shares.
But the Mumbai headquartered startup’s biggest moment in 2020 came in March when it raised more than 100 Cr from existing investor Steadview Capital. This particular funding round helped the company in earning the unicorn tag or billion-dollar valuation.
Nykaa happens to be one of the few profitable internet startups in India. The company posted revenue of Rs 1,860 Cr in FY20 with EBIDTA of nearly Rs 94 Cr. The startup claims that it is expecting the consolidated revenue to grow at 40% in the ongoing financial year.
The company said that its sales grew impressively during the coronavirus lockdown due to the boom in the online shopping.
Nykaa is equally pursuing omnichannel strategy aggressively by expanding its offline stores across the country. The company had opened its third store in Hyderabad only few weeks back.