Fireside Ventures Divests 1.9% Stake In Mamaearth, Books Over 4,600% Profit So Far

D2C unicorn Mamaearth’s early backer Fireside Ventures sold 60.89 Lakh shares in the company or a 1.89% stake in a bulk deal on Tuesday (December 5).  

Reports emerged on Monday (December 4) that the VC fund was looking to sell 61 Lakh shares in the company, worth INR 230 Cr, for INR 368.7-INR 384.1 per share. However, the shares were sold at INR 378 apiece in a deal worth almost INR 230.2 Cr.

Following the deal on the NSE, shares of Honasa Consumer ended the day’s trade 4.4% lower at INR 367.15. On the BSE, the shares ended 5.1% lower at INR 363.85.

It is pertinent to note that the VC fund also sold 79.7 lakh shares of Mamaearth during its IPO. With today’s stake divestment, Fireside has so far booked profit of over 4,600% from its investment in the company.

Mamaearth got listed on the bourses earlier last month. As per SEBI’s regulations, alternate investment funds (AIFs)  of Category I or Category II with more than 20% of the pre-offer share capital are under a six-month lock-in period. 

As per a Moneycontrol report, Category I AIFs holding less than 20% of the pre-offer share capital are exempt from this lock-in, making Mamaearth face a big PE overhang as some of the key holders don’t have a lock-in. 

As per the BSE data, Fireside held 2.43 Cr shares in Mamaearth after its listing. After today’s share offloading, it should hold 1.83 Cr shares or a 5.68% stake in Mamaearth while Stellaris Venture is the other Category I AIF, holding a 5.78% stake in the company.

The D2C unicorn made a muted debut on the Indian bourses last month. While it listed at a  nearly 2% premium on the NSE, the shares made a flat debut on the BSE at INR 324 apiece. 

Following its September quarter earnings results on November 22, the Mamaearth stock touched a record high of INR 475.1 Cr on the BSE. However, the share price crashed following this due to profit booking. 

Speaking on the performance of the stock, Ambareesh Baliga, an independent research analyst, said that Mamaearth’s valuation was expensive and this reflected in the response it got and the muted listing. 

“Sentimentally positive but I believe the spike was unjustifiable… An INR 15 Cr jump in net profit pushes up the market cap of the company by INR 5,000 Cr and that’s not sustainable,” Baliga said.

Despite this, the stock closed today’s trading session 12.3% higher from its listing price on the BSE.

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