omnichannel magnificence gamers: Funds make a beeline for magnificence platforms; Purplle raises $100 million

Omnichannel beauty retailers and brands are attracting top dollars from venture capital and private equity funds, buoyed by post-Covid demand that continues to grow.In the latest instance, Abu Dhabi’s sovereign fund ADIA has led a $100-million financing in a mix of primary and secondary investment in Mumbai-based beauty retailer Purplle at a $1.2-1.3-billion valuation – a jump of around 15% from its previous fundraise last year, people aware of the development said.

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Creaegis – a sector agnostic PE fund founded by former Premji Invest partner Prakash Parthasarathy that has invested in Third Wave Coffee – is expected to join Purplle’s funding round as a new investor and talks are in final stages of closing, sources said. Premji Invest – an existing investor in Purplle – has also doubled down on the firm, people briefed on the matter said.

In a secondary share sale, existing investors sell shares to new investors and the money doesn’t go to company coffers.

MCaffeine, a caffine-based skincare and haircare brand, is also in middle of fundraise process and it is exploring to tap strategic investors besides ongoing talks with financial invetsors for a new funding round, multiple sources aware of the matter said.“Adia has led the round. A couple of smaller family offices are also joining through a fund which manages investment for high net worth individuals,” one of the persons said.

The company is expected to formally announce the round in the coming days.

A spokesperson for ADIA declined to comment while emails sent to Purplle founder Manish Taneja and a spokesperson for Creaegis did not elicit any response till press time Tuesday.

MCaffeine founder Tarun Sharma denied engaging with ‘stratgetic invetsors’ for funding.

The funding would be in MCaffeine’s parent firm PepTechnologies, which also houses recently launched skincare brand Hyphen.

Experts feel several Rs 400-500 crore beauty brands will come up in India even as large incumbents like Nykaa, Myntra, Reliance’s Ajio, and Tira are amping up play in the beauty sector.

In recent months, skincare brand Foxtail and haircare brand Traya raised capital from Panthera Growth Partners and Xponential Capital, respectively.

“Both Traya and Foxtail had multiple term sheets for a round lead,” a person aware of the numbers said. “These companies that closed funding recently have (since then) doubled sales to around Rs 15 crore a month. And these are high gross margin businesses, leading to investor interest in turning profitable at scale.”

In March, Mamaearth parent Honasa Consumer launched a low-cost beauty brand, Staze 9to9, while its active ingredients-backed skincare brand The Derma Co achieved an annual revenue run rate (ARR) of Rs 500 crore in April.

“Companies are launching new brands that will drive growth,” a person tracking the beauty sector deals said. “Newer brands are also growing and hitting revenue milestones faster than older brands, albeit driven by premium pricing also. Hyphen has also been launched with the same thesis,” the person said.

While more brands also means more competition, “new-age brands are differentiating on multiple fronts and not just pricing”, one of the people cited above said. “Despite the surge in demand, some companies have not been able to grow as much…so, that shows product quality matters,” the person added.

Myntra CEO Nandita Sinha said in May beauty is one of the biggest focus areas for the company going forward, ET reported on May 28.

A recent report from Bofa Securities showed that beauty products are growing faster on quick commerce platforms. ET has been reporting about players like Blinkit, Zepto, Swiggy Instamart and BigBasket’s BB Now adding more beauty products.

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