India's Nykaa and Dubai's Apparel Group forge Gulf alliance

Indian cosmetics and fashion retailer Nykaa and Dubai-based lifestyle and fashion conglomerate Apparel Group have struck an alliance to expand in the Gulf region, the companies said on Thursday.

With the agreement, Nykaa hopes to grow in a region where it sees high demand for beauty products, months after inflationary pressures in India led it to report to a "subdued season" in the three months ended June.

Nykaa Chief Executive Falguni Nayar said the two companies would together build a multi-brand beauty retail business in Gulf Cooperation Council countries, with Nykaa holding a 55% stake of the entity and Apparel Group holding the rest.

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The companies did not disclose financial details of the agreement.

"We do believe that the per capita consumption of beauty is very high in the region," Nayar told reporters. "We see this as a multi-year growth opportunity."

The TPG-backed retailer, which made a strong market debut in November 2021, fetching a valuation of nearly $14 billion, expects stronger demand for its products in the current quarter.

The upcoming festival season, which extends to the end of the year, would further boost consumer demand for beauty, personal care and wellness products, which was showing early signs of recovery, Nykaa said in August.

In a statement, Nykaa's parent company FSN E-Commerce Ventures Ltd said its board had approved an agreement between its subsidiary FSN International Private Ltd and Apparel Group.

The agreement is for "an omni-channel, multi branded beauty retail operation business" in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, through an entity to be incorporated in the Abu Dhabi Global Market, it added.