Decoding IPO-Bound D2C Brand Mamaearth’s Shareholding Pattern

D2C beauty brand Mamaearth’s parent entity Honasa Consumer Limited has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). It is expected to go public in 2023, with its initial public offering (IPO) comprising a fresh issue of shares worth INR 400 Cr.

As per the DRHP, the IPO will also consist of an offer-for-share (OFS) component through which 46.82 Mn equity shares will be sold by some investors of the D2C startup.

Varun Alagh, cofounder and CEO of Mamaearth, holds 34.30% stake in the company with a total of 10,67,37,650 shares, as per its latest shareholding pattern. Ghazal Alagh, the other promoter of the startup, holds 3.23% stake. Together, the promoters and promoter group hold 37.60% stake.

The second biggest shareholder in the startup is venture capital firm Sequoia, which holds a total of 24.01% stake. Sequoia holds 51,60,000 equity shares or 19.48% stake in Honasa Consumer Limited through its SCI Investment VI fund. The venture capital (VC) giant holds another 4.53% stake or 28,50,900 shares through its SCI Investment III fund.

On the other hand, Fireside Ventures Fund currently holds 10.39% stake or 18,44,700 shares in the company. The other major shareholders in Honasa Consumer Limited are Stellaris, with 9.5% stake; Sofina, with 9.49% stake; Rishabh Harsh Mariwala, holding 2.93% stake; and Evolvence India Fund III, with 1.1% stake.

Despite being one of the biggest shareholders in the company, Sequoia Capital will not be participating in the OFS while the other VC firms are.

Snapdeal founders and angel investors Kunal Bahl and Rohit Kumar Bansal, and actor Shilpa Shetty Kundra are a few stakeholders participating in the OFS.

The parent of Mamaearth will use the fresh funds raised via IPO to improve brand visibility through higher advertisement expenses, to set up new exclusive brand outlets, and new salons for BBlunt.

Post its IPO, Mamearth will become the second beauty and personal care brand to list on the exchanges. Last year, its competitor Nykaa listed on the exchanges, becoming the first startup to do so.

Mamaearth not only entered the unicorn club in 2022 but also became a profitable entity in FY22. It reported a net profit of INR 19.8 Cr on a standalone basis in the fiscal year as against  a net loss of INR 1,332.2 Cr in FY21. 

The startup’s net profit in the six months ending September 30, 2022, stood at INR 3.7 Cr with operating revenue of INR 722.7 Cr.

Founded in 2016, Mamaearth started as a babycare brand and later became a prominent name in the beauty and skincare products segment. It competes with the likes of WoW Skin, The Moms Co, Plum, and mCaffeine.