Private equity funds and high-net-worth individuals (HNIs), early investors in cosmetics-to-fashion retailer Nykaa, are sitting on strong profits as the company’s pre-IPO shareholder lock-in period draws close.

During the lock-in period, promoters and investors cannot liquidate their holdings of pre-IPO securities. On November 9, nearly 67% of Nykaa’s shares will be released from lock-in. This is equivalent to about 310 million shares.

Steadview Capital Mauritius, TPG Growth, Lighthouse India Fund and HNIs such as Harindarpal Singh Banga, Narotam Sekhsaria and Sunil Kant Munjal will be eligible to sell their stakes.

Promoter Falguni Nayar and his family will also be able to sell a 32.4% stake or about 145 million shares. Analysts said promoters would hold their stakes long-term and are unlikely to sell.

Meanwhile, other pre-IPO shareholders “are sitting on 100-fold returns, which is enough for these investors to diversify their portfolios that they might add to Nykaa,” JM Financial said.

For example, the founder of Caravel Group, Harindarpal Singh Banga, which owns a 6.4% stake in the company, bought the shares at an average price of Rs 7.3. Based on Nykaa’s current market price of Rs 1,180 (at the time of writing), he has returned it 161 times.

The founder of Ambuja Cement, Narotam Sekhsaria, invested more than 120 times in another HNI. He owns a 3.1% stake in Nykaa at an average acquisition cost of Rs 9.9, according to data compiled by JM Financial.

Sunil Kant Munjal, one of the founders and promoters of Hero Group, held a 3% stake and bought the shares at Rs 56.5 per share. This shows that he has returned 21 times.

High-net-worth individuals tend to be long-term investors, said Falguni Nayar, founder and chief executive of the firm.

Private equity funds have also reaped handsome gains on their investments, even though their profits have fallen sharply, even though they are paying higher prices than HNWIs.

Nykaa’s 52-week high of Rs 2,573 was reached on November 26, 2021. Steadview Capital and Fidelity Securities currently own 3.5% and 1.3%, respectively, giving them an ROI of 5.8 times. The companies bought shares at Rs 202 per share.

The acquisition cost of Lighthouse India Fund was Rs 76.7, and the return was 15 times. The fund holds a 2% stake in Nykaa. TPG Growth bought the stock at Rs 117.7, a 10x return.

During the IPO, TPG and Lighthouse India sold some of their stakes in the company. Munjal, Harindarpal Singh Banga, Indra Banga, Sekhsaria and Rishabh Mariwala are also among the sellers.

Last year, the Rs 5,352 crore public offering was in huge demand and was 81.78 times subscribed. With a price band fixed at Rs 1,085-1,125 per share, the stock debuted at Rs 2,018, a 79% premium. Since then, the stock has fallen 45%.