News Update

Good Glamm’s Raymond brands acquisition stands in the dock over brand valuation discrepancy, and financing issues

• ByStartupStory     |    June 30, 2022

Direct-to-consumer provider of cosmetics and personal care A value obstacle has reportedly halted Good Glamm Group’s (GGG) efforts to acquire the Raymond Group’s consumer care division, which includes the Park Avenue and Kamasutra brands. Existing GGG investors have voiced their concerns regarding the Rs 3,000 crore cash-and-stock agreement that the two parties were negotiating. One of the people noted that they still needed to evaluate the “economics and integration flywheel of the spate of past acquisitions.”

Three sources with direct knowledge of the development said that raising loans for the acquisition against the backdrop of interest rate hikes, inflation, and the collapse in global technology valuations is also proving to be difficult. Representatives for Good Glamm and Raymond NSE -3.33 per cent declined to comment on what they termed market speculators.

GGG, founded by Darpan Sanghvi, has acquired twelve brands and businesses in the past 24 months, including PopXo, Mom’s Co, Baby Chakra, ScoopWhoop, MissMalini Entertainment, Sirona, and St Botanica. A $250 million new financing round at a $2 billion valuation that the company has been trying to put together is taking longer to complete as revenues for most direct-to-consumer companies are under pressure.

According to sources, GGG is also taking longer to close its $250 million new investment round. The valuation is being reviewed, but the current investors want to top up. Another insider added, “And, whether to add a new investor on board or merely to retain it as an internal round is yet to be decided. The additional funding would be limited to $150–175 million at a valuation of $1.5–1.7 billion if it were an internal round, the source continued.

GGG raised $150 million from investors led by Prosus last year (formerly Naspers). Additionally among its investors are funds like Warburg Pincus, L’Occitane, Bessemer Venture Partners, Accel NSE 4.29 per cent, Amazon, and Ascent Capital. With the completion of its Series-D investment round in November of the previous year, the company joined the unicorn club of businesses with a valuation of over $1 billion.

After private equity firm KKR bought a sizeable controlling share in Vini Cosmetics, which sells Fogg and other perfume and deodorant brands, the proposed acquisition of Raymond’s consumer business would be the second substantial deal in the perfume market in India. This would be the Good Glamm Group’s second offline acquisition after it bought the organic beauty and personal care company Organic Harvest in January.

The Singhania family controls the remaining 48% of the consumer care company, which is owned by the Raymond Group. If Raymond can close a contract worth Rs 2,500–3,000 crore, he will be net debt free. Its net debt was Rs 1,250 crore at the end of December, and analysis indicates that by the end of the fiscal year in March, it should have decreased. Net sales for the first nine months of FY22 increased by two times to Rs 4,220 crore, while net loss decreased from Rs 353 crore to Rs 3 crore. The amount spent on interest during this time was Rs 170 crore.

 

Follow Startup Story