SUMMARY
Upon completion of the deal, it is likely to value SUGAR Cosmetics at around INR 2,900 Cr
This transaction might see partial exits from early investors of SUGAR Cosmetics
The involvement of Malabar Investments could potentially open doors for other pre-IPO investors to join as well
Malabar Investments, an investment fund focused on India, is reportedly in discussions with the initial investors of Mumbai-based SUGAR Cosmetics for acquiring a stake in the company through a secondary transaction.
As per ET, the deal is likely to be pegged between INR 80-100 Cr.
Upon completion of the deal, it is likely to value SUGAR Cosmetics at around INR 2,900 Cr (around $350 Mn) and could see partial exits from the startups’ early investors, including RB Investments and India Quotient, along with some angel investors and family offices, the report said.
The beauty brand is eager to onboard an investor like Malabar Investments, known for acquiring stakes in companies poised for an initial public offering (IPO) in the near future.
The involvement of Malabar Investments could potentially open doors for other pre-IPO investors to join as well, the report said, citing a person close to the deal.
The overall framework is currently being finalised. Although a term sheet has been drafted, the allocation of exits among investors is still under consideration.
For Malabar Investments, led by former McKinsey executive Sumeet Nagar, this deal would expand its portfolio with another consumer company. The firm has backed consumer-focused startups like boAt, Bombay Shaving Company, and Ixigo. Its investment focus primarily centres on small and mid-sized public companies.
“In the recent past, we have received strong interest from domestic and global private equity funds for equity investments in the organisation,” a SUGAR spokesperson told ET.
“However, given that the company turned profitable in December of last year, there is no requirement for primary investment at present. In light of this, a few funds have engaged in conversation to actively explore the possibility of joining our cap table as shareholders via a secondary stake purchase,” he added.
Founded by Singh and Kaushik Mukherjee in 2015, SUGAR Cosmetics started its journey as a D2C brand, with an online platform. Later, it pivoted to an omnichannel model and claims to have over 40,000 retail outlets across more than 550 cities in India. The platform markets products in the lips, eyes, face, nails and skin categories.
Back in 2022, SUGAR Cosmetics raised $50 Mn in Series D funding round led by the Asia fund of L Catterton, and A91 Partners, Elevation Capital and India Quotient as well.
SUGAR Cosmetics’ sales inched closer to INR 500 Cr mark in the financial year ending on March 31, 2023. The startup reported an operating revenue of INR 420.2 Cr in FY23, an 89% increase from INR 221.8 Cr it had generated in the previous fiscal year.
The startup’s total revenue was INR 428.3 Cr, a 91.3% from INR 223.8 Cr it had generated in the previous fiscal year. In FY23, the startup incurred a net loss of INR 76.2 Cr, a marginal increase from INR 75.9 Cr it had incurred in the previous fiscal.
