Mamaearth IPO: Sofina, Kunal Bahl, Shilpa Shetty To Dilute Stake, Sequoia Not To Sell

SUMMARY

Sofina is the biggest institutional seller at the IPO, followed by Stellaris, Fireside Ventures and Evolvence

Sequoia Capital India holds a 24.01% stake in Mamaearth, however, it has decided against diluting its stake in the IPO

Cofounders Ghazal and Varun Alagh will also participate in the share sale, along with Shilpa Shetty, Kunal Bahl, Rishabh Mariwal and Rohit Bansal

The initial public offer (IPO) of Gurugram-based D2C skincare startup Mamaearth will see many of the biggest stakeholders diluting their stake in the company, including Bollywood actress Shilpa Shetty Kundra, Snapdeal founder Kunal Bahl and multiple institutional investors.

According to the draft red herring prospectus of Honasa Consumer Ltd, the parent of Mamaearth, Sofina will be the biggest seller at the IPO. The Belgian venture capital (VC) firm will sell 19.13 Mn shares through the offer for sale (OFS) component of the IPO. Stellaris will be the second-biggest seller, selling 12.75 Mn shares.

Fireside Ventures, the second-largest institutional investor in Mamaearth, will sell 7.92 Mn shares. Meanwhile, VC firm Evolvence plans to sell 1.08 Mn shares.

Sequoia Capital India is the VC firm with the highest stake in Mamaearth ahead of the IPO. It owns a 24.01% stake via Funds III and VI. However, it has decided against diluting its stake in the IPO.

According to the shareholding pattern shared by the startup in the draft documents, founders Ghazal and Varun Alagh, who are also promoters, hold a majority stake of 37.53%. Sequoia and Fireside are the only other stakeholders with a double-digit stake in the company.

Following the VC firms, cofounder and largest stakeholder Varun Alagh will also participate in the share sale, offering 3.18 Mn shares at the IPO.

Speaking of individual investors diluting their stake, Bahl will be selling 777.6K shares, while Shilpa Shetty will sell 554.7K shares at the IPO. Titan Capital founder Rohit Bansal will also dilute some of his stake during the IPO, having put up 777.6K shares on sale in Mamaearth’s OFS portion.

While Bahl, Bansal and Shetty hold less than 1% equity each in Mamaearth, it is not certain whether the three are making complete exits from the company.

Sharrp Ventures’ Risabh Mariwala holds the biggest individual stake in Mamaearth after the cofounders. He will sell only around 477.3K shares at the IPO. This means that Mariwala will be diluting a small portion of his 2.93% stake in the IPO.

The IPO will also comprise a fresh issue of shares worth INR 400 Cr.

Of the net proceeds from the IPO, the D2C brand will deploy INR 186 Cr to bolster its advertising efforts. A further INR 34.23 Cr will go towards setting up new exclusive business outlets (EBOs), while it will use INR 27.51 Cr to invest in BBlunt and set up new salons.

The rest of the proceeds will go towards inorganic growth via acquisitions and general corporate purposes.

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