SUMMARY
Mamaearth is on wait and watch mode with regards to its IPO due to the volatility in the global stock market: Report
The company reportedly began informal talks with investors over IPO valuation, but there was a difference in the valuation that it was seeking and what investors were willing to give
Meanwhile, Mamaearth said it is awaiting formal approval from SEBI for its DRHP and it would have 12 months to file RHP and take the company public
D2C beauty ecommerce unicorn Mamaearth has reportedly put its initial public offering (IPO) on hold due to weak market conditions.
Mamaearth is now in a “wait and watch mode”, people aware of the development told Reuters, given the persisting volatility in the global stock market. The banking crisis over the last month in the US and Europe has further hit the sentiment in the stock market.
Meanwhile, Mamaearth said in a statement, “This is to clarify, we are still engaging with SEBI on our DRHP and awaiting formal approval for the same. Post the approval, as is in line with the regulations, we will have 12 months to file RHP and take the company public, which we will do in consultation with our bankers.”
As per the Reuters report, Mamaearth was looking to raise $200 Mn-$300 Mn through the public offer.
However, Mamaearth said that pricing and valuations will be discovered as part of marketing roadshows and the company is not focused on short-term valuations. It said the company’s largest investor will not be selling a single share in the company, while the promoters will continue to hold over 97% of their stake in the company post the IPO.
“… hence we have no interest in optimising for short-term valuations, we are in this for the long term,” the startup added
Mamaearth’s parent company Honasa Consumer Limited filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in December last year.
As per the DRHP, the IPO would comprise of INR 400 Cr worth of fresh issue of shares and an offer for sale (OFS) for 46.82 Mn shares. While the promoter group owns 37.6% stake in the company, Sequoia India is the second-largest shareholder with 24.01% stake, according to the draft papers.
Founded by the husband-wife duo of Varun Alagh and Ghazal Alagh in 2016, Mamaearth started its journey as a D2C brand by selling baby care products. Gradually, it forayed into the personal care segment and now provides makeup, haircare, and beauty products. The startup currently delivers products to more than 500 cities in the country.
As per the news agency’s report, the company began informal talks with investors over IPO valuation. However, there was a difference in the valuation that the D2C brand was seeking and what investors were willing to give.
Mamaearth’s last private valuation was around $1.3 Bn. However, shortly after it filed the DRHP with SEBI, some social media posts said that the unicorn was seeking a valuation of $3 Bn, which led to intense debates around its revenue and profit. However, Mamaearth at that time denied the rumours and said that it had not quoted or subscribed to the valuation numbers mentioned in the social media posts.
The unicorn turned profitable in FY22, posting a standalone net profit of INR 19.8 Cr as against a net loss of INR 1,332.2 Cr in FY21.
The latest development comes at a time when several startups including Snapdeal, Droom, PharmEasy, MobiKwik, and OYO have either shelved their IPO plans or withdrawn their DRHP over the last year or so amid severe macroeconomic volatility and a funding winter.
Mamaearth is backed by the likes of Fireside Ventures, Stellaris Venture Partners, Bollywood actress Shilpa Shetty Kundra, Snapdeal founder Kunal Bahl, among others.
