ISSUE 13 | JAN'21

FINeprint
A weekly update on high impact areas in Finance

In This Issue Key Updates this week

An IPO of firsts- IRFC IPO IRFC IPO is the first Government-owned NBFC to go public
IPO valued at ₹ 4,633 crores with price band ₹25-26/equity share
First time a PSU used the anchor-investor route to raise funds
Investment Banking Snippets First of 6 IPOs scheduled for January

Udaan continues to fly in its
extended funding round
PE-VC Talks
Raised $280 mn in extended Series D funding at $3.1 bn valuation
Funding expected to help expand its logistics network and user
base and strengthen its NBFC arm
Retail Market expected to witness strong interest from large
corporations and startups

A97 Partner turns out to be La Renon has raised $30 mn (₹220 crores) from A97 Partners
the new investor for La Deal was closed at $500 mn valuation vs $100 mn in 2015
A91 has invested in 5-6% stake & Sequoia will hold 12.5% stake
Renon
PE-VC Talks Money to be used for diversifying their portfolio and R&D

Nykaa: First Unicorn IPO of Potential IPO in 2021 of India’s homegrown E-Commerce Unicorn
2021? Earlier secondary placement provided exit to investors & ESOPS
A glimpse into the Journey of NYKAA and recent launches
PE-VC Talks How Covid-19 induced lockdowns impacted NYKAA?

Performance Snapshot Monthly return of fund was -0.72% vs. Nifty 50 return of -2.74%
Currently holding 29 stocks ~ ₹8,81,218; 1 debt fund ~ ₹1,51,054
Entered Mangalam Organics, Maan Alumnium and Ujjivan Small
JAF Reveals Finance Bank

Fin Quote of the week It's far better to buy a wonderful company at a fair
price than a fair company at a wonderful price.
WARREN BUFFETT

Please mail us your views, articles & feedback at below email id:
FinClub@email.iimcal.ac.in

Issue 13 | Jan'21 Page 1

FINeprint by FinClub Investment Banking Snippets

An IPO of firsts- IRFC IPO

What is happening?
Indian Railway Finance Corporation (IRFC), valued at ₹4,633 crores, hit the market with its initial
public offer (IPO) on 18th January. It is the first Government-owned NBFC to go public. The IPO's
price band was ₹25-26 per equity share. At the upper end of the price band, IRFC hoped to raise
₹4,633 crores, and at the lower end, ₹4,455 crores. The anchor book opened on 15th January,
allocating up to 50 percent of the portion reserved for qualified institutional buyers (QIBs). This
was the first time that a PSU is using the anchor-investor route to raise funds.
The initial public offering of up to 1,78,20,69,000 equity shares consisted of a fresh issue of
1,18,80,46,000 equity shares and an offer for sale of 59,40,23,000 equity shares by the Government
of India.
In the grey market, IRFC shares were seen trading with a muted premium of ₹1.60 apiece over the
issue price. However, analysts on the street felt that the issue seemed to be an undervalued
offering. As the primary market had been awarding investors with a fair amount of listing gains in
recent times, this issue was also expected to draw a significant amount of investors’ interest. The
strong fundamental aspects also seemed to make it a good bet for medium to long term gains
according to the street.
However, IRFC made a tepid market debut on 29 January, as the scrip got listed at ₹24.90 on NSE,
a discount of 4.23 percent to its issue price of ₹26. The listing was weak compared with the
premium unlisted shares of IRFC were commanding in the grey market. A rebound in the
secondary market after a five-day selloff failed to lift the counter.

Company Background
Incorporated in 1986, the IRFC is a public-sector enterprise that is wholly-owned by the
Government of India. IRFC is primarily engaged in financing the acquisition of rolling stock assets,
leasing of railway infrastructure assets, and lending to entities under the Ministry of Railways
(MoR). Being the borrowing arm of Indian Railways, IRFC is responsible to raise funds for MoR that
is required to procure rolling stock assets, its improvement, expansion, and assets management.
It follows a financial leasing model to finance rolling stock assets procurement for a lease period
of 30 years. In fiscal 2019, the actual capital expenditures by the Indian Railways were ₹1,334 bn,
out of which, IRFC financed ₹525.35 bn accounting for 39.34% expenditures.
IRFC is registered with the Reserve Bank of India as an NBFC and is classified under the category
of an 'Infrastructure Finance Company' of the Reserve Bank of India Act. The President of India
acting through the Ministry of Railways (MoR) is the promoter of the company.

Insights
With at least 15 IPOs scheduled for 2021; out of which, six are likely in January alone, the IRFC IPO
can give an early indication of investor appetite this year. Companies such as Indigo Paints, Home
First Finance Company, IRFC, Brookfield REIT and RailTel Corporation of India either launched or
are expected to launch their IPO in January.

Further readings
https://www.financialexpress.com/market/ipo-news/irfc-ipo-psu-nbfc-indian-railways-initial-
public-offer-indian-railway-finance-corporation-public-issue-subscription/2171395/
https://www.ndtv.com/business/irfc-ipo-indias-first-psu-nbfc-issue-opens-monday-2353163
https://www.moneycontrol.com/news/business/ipo/indian-railway-finance-corporation-to-
launch-ipo-on-january-28-price-band-set-at-rs-25-26-6339541.html
https://www.chittorgarh.com/ipo/irfc-ipo/1076/

Issue 13 | Jan'21 Page 2

FINeprint by FinClub PE-VC Talks

Udaan continues to fly in its extended

funding round
Deal Summary
Udaan, the fastest startup to reach the unicorn status in India, was able to raise $280 mn in its
extended Series D funding round which had initially raised $585 million in October 2019. The
startup has been successful in raising $1.15 bn so far and is currently valued above $3 bn. The
latest round attracted investments from existing investors, Lightspeed Venture Partners, DST
Global, GGV Capital, Altimeter Capital, and Tencent, as well as from US-based technology
investment firm Octahedron Capital and Moonstone Capital as new investors.

Company Profile
Udaan is a B2B trade platform that brings manufacturers, traders, retailers, and wholesalers into a
single platform helping them discover customers, suppliers, and products across categories and
connect directly with each other for the best deal. The company was co-founded by Flipkart
employees Amod Malviya, Sujeet Kumar, and Vaibhav Gupta.
The company has both food and non-food category and enjoys over 25,000 national & regional
brands on the platform operating in categories which include lifestyle, electronics, home & kitchen,
staples, fruits & vegetables, FMCG, pharma, toys, and general merchandise. It handles around
8,000 tons of food products daily, making it the largest grocery player in the country. It has a
network of 3 mn users mostly small and medium retailers, with nearly half of them as active users,
spread over 12,000 out of 15,000 pin codes covering 900 cities.

Insights
The B2B market in India is currently at $780 bn and is expected to grow to $1000 bn by 2025.
Udaan currently generates $2.4 bn in gross merchandising value making its current market share
stand at 0.3-0.4 percent. The retail market in India is highly fragmented and unorganized with huge
potential from tier II and tier III cities and has attracted interests from Reliance, Amazon, and
Walmart. The 15 mn small and mid-sized retailers constitute 85% of retail sales and all the B2B
and B2C platforms are looking up to grab this share of the pie.
The digitization of kirana stores in India gained more pace post the pandemic where the less tech-
savvy retailers had fewer alternatives. Udaan has been trying to fill the void of a strong logistics
network which leads to losses for firms and burdens the retailers with higher prices. It is looking
forward to offer better pricing by reducing the various layers in the distribution chain and passing
on part of the savings to the retailer and get a greater commission from them. It plans on
increasing its warehousing 5x from 10 mn sq feet to 50 mn sq feet for the same.
It also looking forward to provide better financial products such as working capital loans to its
SME buyers as well as sellers to help them grow via its NBFC arm UdaanCapital. This segment had
lesser attention previously, however, the fresh round of funding is expected to focus on this
segment as well. Udaan is aiming to make it IPO ready in the next 2 to 3 years. However, Indian
public investors have a tendency to give the profitability a huge weightage in their decisions and
the companies are looking to chart a territory to balance both profitability & growth. While the non-
food segment is already giving positive results, the food segment requires more aggressive
strategies to achieve scale. The company believes that it has raised enough money for two years
and it will be interesting to see the path it takes in the coming years.

Further readings
https://www.business-standard.com/article/companies/udaan-plans-to-grab-10-15-of-overall-b2b-
retail-market-in-the-next-7-years-121011900055_1.html

Issue 13 | Jan'21 Page 3

FINeprint by FinClub PE-VC Talks

A97 Partner turns out to be the new investor

for La Renon
About Company
La Renon Healthcare Pvt. Ltd is one of the top 50 pharmaceutical companies in India. It is
established with a vision to become a global healthcare company by offering world-class quality
healthcare. Established in 1970, La Renon caters to Nephrology, Critical Care, Neurological
Disorders, Urology, Gastroenterology, Respiratory, and other significant fields. It has expanded into
prominent South-East Asian, African, and CIS countries recently expanded its manufacturing plant,
making it compliant with international accreditations in Europe, Australia, UK, and Brazil. A97
Partners is a Mumbai based VC that was floated in 2018 by Sequoia Capital executives closed its
maiden fund at $350 mn in July 2019. Now it is eying to launch its second fund soon.

Sector Information
Health Care has become one of the most prominent sectors, both in terms of revenue and
development. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing,
telemedicine, medical tourism, health insurance, and medical equipment. Gross direct premium
income underwritten by health insurance grew 17.16% y-o-y to ₹51,637.84 crores ($7.39 bn) in
FY20. The country had 393 Ayurveda, and 221 homeopathy Government recognized colleges. As
of April 2020, many sub-centers reached 169,031 and the number of primary health centers
(PHCs) increased to 33,987. The hospital industry size is estimated to touch $193.83 bn by 2020
and $372 bn by 2022. Health insurance is gaining momentum in India. Gross direct premium
income underwritten by health insurance grew 17.16% y-o-y to ₹51,637.84 crores ($7.39 bn) in
FY20.

Deal Summary
The deal valued at around $30 mn (₹220 crores) in the Ahmedabad based startup. This investment
was made at a valuation of $500 mn. Before this La Renon was Valued at $100 mn in 2015 when it
received ₹100 crores ($16 mn then) from Sequoia Capital. A91 has invested in a 5-6% stake in the
company. Sequoia will continue to hold around a 12.5% stake in the company. La Renon company
closed the financial year ended March 31, 2020, with gross sales of around ₹800 crores and
earnings before interest, tax, depreciation, and amortization (EBITDA) of ₹150 crores.

Insights
La Renon will use the above investment to strengthen its product portfolio and to strengthen its
R&D sector. Moreover, with the onset of the pandemic, the opportunity in the healthcare sector has
improved exponentially. In addition to this, La Renon has solutions for neuropathic pain was
awarded a patent in Canada, the European Union, and other nations. Its significant global presence
and its ability to carve out a niche into the early drug market can grow many folds in the coming
years. Considering all the above factors regarding La Renon, the investment of A97 partners can
reap considerable rewards in the coming years.

Further readings
https://www.vccircle.com/sequoia-backed-pharma-firm-la-renon-ropes-in-a91-partners-as-
new-investor/
https://economictimes.indiatimes.com/tech/funding/la-renon-raises-30-million-from-a91-
fund-at-500-million-valuation/articleshow/80205260.cms

Issue 13 | Jan'21 Page 4

FINeprint by FinClub PE-VC Talks

Nykaa: First Unicorn IPO of 2021?

Brief
According to reports, Nykaa is apparently gearing up for a $3 bn IPO. This has created a lot of buzz
as it will one of the first major unicorns going for listing in India. Last year, Fidelity Management &
Research Company invested in Nykaa, a homegrown omnichannel fashion and beauty unicorn.
That transaction is a secondary placement that facilitated partial exit for its early investors as well
as an exit for employee ESOPs. Nykaa has recorded revenue of ₹1,860 crores for the year ending
March 2020 with EBIDTA of ₹94 crores and the company’s revenues are projected to grow at
around 40 percent on a consolidated level for FY 2021. The investment comes after Nykaa raised
₹166 crores in a primary transaction from Steadview Capital in March at a valuation of $1.2 bn.

About Nykaa
Nykaa was set up in 2012 by investment banker-turned-entrepreneur Falguni Nayar, who was a
managing director at Kotak Mahindra Capital. Its online marketplace sells products across
categories ranging from skincare, haircare, fragrances, bath and body, and luxury products for both
women and men. Beauty products were once confined to flashy stores and expensive malls. But
once Nykaa started selling cosmetic products online, that barrier had to fall. It’s a disruption that
very few people saw coming but Falguni Nayar, the founder, and CEO, could see it from a mile
away. More recently, they ventured into fashion to capture a higher wallet share of their existing
elite customer base. Today, it became a sizeable portion of the total business, and they are seeing
extremely strong growth in the new segment. Recently the company also launched the iconic
Charlotte Tilbury, a makeup and skincare products brand to India. Lime Crime is its vegan and
cruelty-free products, creating colorful trends and innovations that have taken the beauty world by
storm. Nykaa has a strong following of millennial and Gen Z customers, and Lime Crime is a
perfect catalyst allowing them to express their individuality. It has been an exciting journey.

What differentiates NYKAA?

Unlike traditional e-commerce companies who preferred to acquire customers via the deep
discount model, Nykaa chose to do things a bit differently. They were prudent with their spending.
Their losses were never disproportionate when compared to their revenues. Cosmetic products
are difficult to sell. First, you have to educate consumers. Second, you have to use people who are
trustworthy & do it in a transparent manner because customers are deeply distrustful of
institutions. Building trust and simultaneously generating high engagement levels can be even
more painstaking. They did both the task pretty well by building a community of influencers and
leveraging content. After establishing themselves firmly in the digital channel, they’ve also gone on
to set up physical stores in multiple cities. These physical stores augur well for the company's
omnichannel strategy — a fully-integrated shopping experience irrespective of where the buying
actually happens.

Nykaa during COVID-19

Nykaa is appropriately positioned to benefit from the recent tailwinds that have supported sales
for predominantly online businesses. The combination of accelerated consumer activity online and
overall brand performance for Nykaa has boosted its market share in the beauty business as well
as jump-started growth for its recently launched fashion platform. This has allowed Nykaa to
increase its share in the beauty market.

Issue 13 | Jan'21 Page 5

FINeprint by FinClub JAF Reveals

Performance Snapshot
Portfolio Value: ₹ 10,32,272

Monthly Return: -0.72%

Top three gainers of the month:

1. Mangalam Organics Ltd.: 23%

2. SBI Cards: 14.76%

3. Havells India Ltd.: 14.73%

Top three losers of the month:

1. Coforge Ltd.: -14.14%

2. Navine Fluorine International Ltd.: -13.19%

3. Asian Paints: -13.09%

Market Review

Nifty plunged after touching record highs of over 14,700 by more than 5% in
last 4 trading sessions to touch monthly lows of 13,800. The selloff was
triggered by foreign portfolio investors turned sellers who want to book their
profits before the Union budget is announced. This fear has also increased
volatility with India VIX rising more than 15% in the last 5 trading sessions.

Aditya Birla Fashion and Retail Ltd (ABFRL) signed an agreement on 27

January to acquire 51% stake in the Indian luxury designer Sabyasachi for
₹398 crores. Sabyasachi is ABFRL’s third investment in Indian ethnic wear
since mid-2019. In July 2019, ABFRL bought a 51% stake in Finesse
International Design Pvt. Ltd, and it also acquired ethnic apparel and lifestyle
retailer Jaypore for ₹110 crores in June 2019.

Cryptocurrency investors who were bullish on bitcoin to cross its peak levels
of $40,000 again, face a backlash with falling demand for the largest fund
tracking bitcoin, Grayscale Bitcoin Trust. The fund slid 22% in 2 weeks (as on
22nd January) as compared to a 17% fall in bitcoin in the same period.
According to JPMorgan Chase and Co, the current institutional flow is not
enough for the bitcoin to break the $40,000 levels again.

Issue 13 | Jan'21 Page 6