D2C Brand Mamaearth Gets SEBI Nod For IPO

Honasa Consumer Ltd, the parent entity of beauty ecommerce unicorn Mamaearth, has received approval from the Securities and Exchange Board of India (SEBI) to float its initial public offer (IPO).

In its updated document, SEBI noted that it issued an observation letter to Honasa Consumer on July 28, 2023. In SEBI’s parlance, issuance of an observation letter signifies approval to launch a public issue.

SEBI’s nod comes seven months after the company filed its draft red herring prospectus (DRHP) in December last year.

Mamaearth’s IPO comprises a fresh issue of shares worth INR 400 Cr and an offer for sale (OFS) of 46.82 Mn equity shares.

As per the DRHP, several Honasa investors, including founders, Ghazal and Varun Alagh, Evolvence, Fireside Ventures, Sofina Ventures SA, Stellaris Venture Partners, Snapdeal founder Kunal Bahl, and Bollywood actress Shilpa Shetty Kundra, are expected to dilute their holding in the IPO.

Earlier this year, a report emerged that Mamaearth was in a “wait and watch mode” for its IPO due to the persisting volatility in the global stock market. However, the beauty ecommerce brand clarified that it was just waiting for the market regulator’s formal approval. 

After receiving SEBI’s nod, the startup now has 12 months to file its red herring prospectus (RHP) and take the company public.

Mamaearth’s last publicly reported private valuation stood at around $1.3 Bn. 

Shortly after it filed its DRHP, many social media posts claimed that Mamaearth was seeking a valuation of $3 Bn, leading to strong debates around its revenue and profit. However, the startup called the posts as rumours.

Mamaearth turned profitable in FY22 with a standalone net profit of INR 19.8 Cr as against a net loss of INR 1,332.2 Cr in FY21. 

Inc42 reported in June this year that Mamaearth was shutting its influencer engagement platform Momspresso MyMoney due to its mounting losses.

With a revival in the stock market sentiment in the last few months, the Indian public market has witnessed an uptick in the number of companies launching their IPOs. 

However, only one new-age tech startup, ideaForge, has gone public this year. The drone startup made a stellar debut on the exchanges last month. However, at least eight other startups that were expected to go public in 2023 are yet to take a step ahead.

Meanwhile, GoDigit, which is also expected to launch its INR 3,500 Cr IPO this year, is yet to receive SEBI’s approval.

Despite refiling its DRHP with the market regulator in March, SEBI in its latest document categorised GoDigit under the section – draft offer document in relation to which comments sought from other regulators/ government agencies and response awaited.

SEBI also noted that OYO parent Oravel Stays Ltd’s IPO document is still in the pre-filing stage and the responses from lead manager to the issue on clarifications sought by the regulator are still awaited.

Meanwhile, SEBI also issued observation letters to two other companies – Indegene Limited and Vishnu Prakash R Punglia Limited.