Mamaearth plans to list for $2 million before Diwali

 Mamaearth plans to list for $2 million before Diwali

Mumbai: Honasa Consumer Pvt. Ltd., which manages the direct-to-consumer brands Mamaearth and Derma Co., plans to go public before Diwali this year. The IPO may fetch the business a valuation of between $1.2 billion and $1.4 billion.

Three sources with knowledge of the development, who asked not to be identified because the information is private, said the business is lining up investors for its anchor book, for which it is seeking between 800 and 900 crore from institutional investors.

The first source mentioned above said that "the book-building process started round this valuation, and there is significant enthusiasm from investors for that value." One group of investors with an interest in the anchor book is Capital Group, followed by Fidelity International. The second source continued, "There will also be a lot of domestic investors. On November 10th, Diwali will begin.

Since Mamaearth was valued at $1.2 billion in January 2022, this price represents something of a climb-down for the company. When it later raised $52 million, it was admitted to the coveted unicorn club.

The initial IPO bid by Mamaearth last year was criticized for its above $3 billion value goal. Markets have now stabilized, financing has slowed, and many investors have reduced their investments.

If this IPO is successful, it will be the first new-age company following the fundraising winter that began in 2022 that is willing to go public. These businesses are trying to take advantage of a window of opportunity to go forward with their plans for listing now that the capital markets are recovering.

The decision to go on with the IPO was made after the securities market regulator Sebi gave its final approval to the Gurugram-based company's UDRHP (updated draft red herring prospectus). It has not yet received official approval.

According to the draft red herring prospectus (DRHP) submitted in December 2022, the IPO would include a new issuance of 400 crore and an offer-for-sale (OFS) of up to 46.82 million shares.

According to the individuals quoted above, the OFS, or stake sale by current owners, would probably cost between 1,500 and 1,600 crore. The entire issue size would probably be more than Rs 2,000 crore.

The potential sellers who are hoping to partly cash out include its investors Sofina Ventures (9.5% stake), Stellaris (9.5% stake), and Fireside Ventures (10.4% stake). Among its other sponsors are Peak XV (formerly Sequoia Capital India) and Evolvence.

Together, the company's founders Varun Alagh and Ghazal Alagh own around 37.5% of the business. According to the company's paperwork, Ghazal would probably sell 1% to 3% of her ownership, while Varun will sell the remaining 3% as part of the OFS.

The Capital Inc. and Fidelity spokespersons did not respond to emails addressed to them. Mamaearth choose not to respond. The share sale is being managed by Kotak Mahindra Capital, Citigroup Global Markets India, JP Morgan India, and JM Financial.

The 2016-founded business offers secure cosmetics and personal care items. The firm has launched other brands since the introduction, including Derma Co., Aqualogica, Ayuga, Bblunt, and Dr. Sheth's. Its product line includes about 40 Derma Co. goods and almost 140 Mamaearth products.

Operating income for the firm was $456 crore for the fiscal year that ended on March 31, 2022, the same as it was in FY21. In FY22, it made a profit of 14.4 crore. It still hasn't submitted its FY23 figures.