Existing investors of GGG have expressed their objection to the Rs 3,000 crore cash and stock deal that both sides were negotiating. According to him, “the economics and the flywheel of integration of previous acquisitions still need to be tested,” said one of the people.
Borrowing for acquisitions is also proving to be a challenge in the backdrop of rising interest rates, inflation and slowdown in global technology valuations, said three people with direct knowledge of the development.
Good Glam spokespeople declined to comment on what they called market speculation.
ET first reported on the proposed GGG-Raymond deal on May 4.
In the past 24 months, GGG, founded by Darpan Sanghvi, has acquired a dozen brands and companies such as PopExo, Moms Company, Baby Chakra, ScoopWhoop, Mismalini Entertainment, Sirona and St. Botanica. With most direct-to-consumer companies coming under pressure, a new $250 million financing round at a $2 billion valuation that the company is trying to stitch together is taking longer to complete.
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Known as one of the largest M&A in the making in the consumer segment, the Good Glam-Raymond deal, if completed, will give the new age company an unparalleled access to the Raymond Group retail network . Make It will also mark Good Glam’s entry into the men’s personal care and sexual wellness category.
“There are many challenges to the deal. The two sides are renegotiating certain terms of the deal, especially the price,” said a person with direct knowledge of the deal.
Sources said GGG is also taking longer to complete its new funding round of $250 million. “Existing investors want to top up, but pricing is being reconsidered. And, whether to bring a new investor on board or to keep it only as an internal round is yet to be decided,” said another person. If this is an internal round, the new funding will be limited to $150-175 million at a valuation of $1.5-1.7 billion, the person said.
Last year, GGG was
Raises $150 million from investors led by Prosus (formerly Naspers), It’s Warburg Pincus, L’Occitane, Bessemer Venture Partners,
, Amazon and Ascent Capital are its investors. The company entered the unicorn club of companies with a valuation of over $1 billion with its Series-D funding round in November last year.
According to a company executive who spoke anonymously, the company has seen high user engagement following various acquisitions. “The company now has 250,000 new monthly users in addition to the 500,000 users of the Good Glam brand,” the person said. According to him, the brands have also seen “hockey-stick growth” post-integration with 30% more revenue due to the content of the commerce funnel the group provides.
The proposed acquisition of Raymond’s consumer business will be the second major deal in the perfume category in India as private equity firm KKR has acquired a significant majority stake in Vini Cosmetics, which sells Fogg and other perfume and deodorant brands.
This will be the second offline acquisition for Good Glam Group after it acquired organic beauty and personal care brand Organic Harvest in January.
Sources said Raymond’s consumer care business has recovered from the Covid shock with revenue of around Rs 750 crore and is now seeing pre-pandemic sales numbers. “While the numbers have bounced back, the incremental growth has been somewhat muted and there is some re-negotiation around the value of the portfolio. While GGG has pegged it at Rs 2,000 crore, Raymond’s demand is over Rs 3,000 crore,” said one of the people.
Raymond Group holds about 48 per cent stake in the consumer care business, while the rest is with the Singhania family. A deal worth Rs 2,500-3,000 crore may help Raymond become debt free. ET’s analysis shows that its net debt stood at Rs 1,250 crore at the end of December and is expected to reduce by the end of the financial year in March. Its net sales doubled to Rs 4,220 crore in the first nine months of FY22, while the net loss declined to Rs 3 crore from Rs 353 crore a year ago. The interest expense during this period was Rs 170 crore.