Mamaearth In Talks To Raise About $150 Mn in Pre-IPO Round From SoftBank, QIA, Other

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SUMMARY

Mamaearth has held preliminary discussions with the likes of SoftBank, Singapore's GIC, Qatar Investment Authority, and Fidelity Investments for the funding round

The pre-IPO funding round will mostly be a secondary share sale, with some early investors expected to sell their shares

Earlier this month, Mamaearth received the final approval from SEBI for its IPO, comprising a fresh issue of shares worth INR 400 Cr and an OFS element of 46.82 Mn equity shares

Beauty ecommerce unicorn Mamaearth is reportedly looking to raise about $120-150 Mn (INR 993 Cr-INR 1,241 Cr approx.) in a new funding round at a valuation of $1.5 Bn, ahead of its initial public offering (IPO).

Mamaearth has held preliminary discussions with the likes of SoftBank, Singapore’s GIC, Qatar Investment Authority, and Fidelity Investments for the funding, Moneycontrol reported citing sources. The startup’s early investors are reportedly looking to cash out in the round prior to the IPO.

The pre-IPO funding round will mostly be a secondary share sale. Mamaearth, being a profitable company, does not need a primary capital infusion at this point, a source told the publication.

Mamaearth was not immediately available to respond to Inc42’s query on the development.

As per the publication, the talks about the fundraise are still in their early stages.

“SoftBank has been largely looking at follow-on rounds. Mamaearth is profitable and with broader markets looking up, its IPO could sail through which makes it a good fit for SoftBank,” a source was quoted as saying.

However, it is pertinent to note that amid growing losses, SoftBank has significantly lowered its new investments in the country over the last two years. It has also been trying to exit startups in its India portfolio and offloaded shares in many companies, including Paytm and Zomato.

On the other hand, Mamaearth received the final approval from the Securities and Exchange Board of India (SEBI) to float its IPO earlier this month. The company filed its draft red herring prospectus (DRHP) in December last year.

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

Founded by the husband-wife duo of Varun and Ghazal Alagh in 2016, Mamaearth started its journey as a D2C brand selling baby care products. Gradually, it forayed into the personal care segment and now has products ranging from makeup and hair care to body care and others.

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

The D2C major turned profitable in FY22 with a standalone net profit of INR 19.8 Cr compared to a net loss of INR 1,332.2 Cr the previous year.