Mamaearth’s Parent Company, Honasa Consumer, Prepares for Blockbuster IPO To Raise Rs 1700 Crore

Mamaearth’s parent company, Honasa Consumer, is gearing up for a pre-Diwali stock market debut and is planning to raise Rs 1,700 crore through an initial public offering (IPO), as reported.

The company submitted a Draft Red Herring Prospectus to the Securities and Exchange Board of India (SEBI) on December 28, 2022.

The Parent company is aiming to generate approximately INR 1,700 Crores through a combination of a fresh share issue and an offer-for-sale, with an estimated valuation target of INR 10,500 Crores.

The proceeds from the fresh share issue will be allocated towards strengthening marketing efforts, expanding brand presence, establishing new exclusive brand outlets, and growing the BBlunt salon network.

The highly anticipated initial public offering (IPO) in the Indian consumer sector, specifically Mamaearth’s parent company, Honasa Consumer, is expected to debut on Dalal Street by the end of October 31 to November 2.

In addition to Mamaearth, Honasa Consumer owns notable direct-to-consumer brands such as The Derma Co and BBLunt, acquired from Godrej Consumer Products for Rs 134 Crores in February 2022.

Honasa Consumer is a digital-first conglomerate specializing in beauty and personal care products. According to the Draft Red Herring Prospectus (DRHP) filed by the company, the proposed IPO comprises a fresh issue of shares worth Rs 400 Crores and an Offer for Sale (OFS) of up to 46.80 million equity shares.

Sources state, “There is strong demand for the Honasa Consumer IPO, scheduled from October 31 to November 2. The anchor portion will open on October 30, with no pre-IPO round planned at this time.”

Honasa Consumer, co-founded in 2016 by the husband-wife duo Varun and Ghazal Alagh, achieved ‘Unicorn’ status after securing $52 million in capital at a valuation of $1.2 billion in January 2022, led by the prominent VC firm Peak XV Partners (formerly known as Sequoia Capital).

The IPO is being facilitated by investment banks, including Kotak Mahindra Capital, JM Financial, Citi, and JP Morgan, with legal counsel provided by Cyril Amarchand Mangaldas, IndusLaw, and Khaitan & Co. The offering encompasses a fresh share issue valued at INR 400 Crores and an offer for sale of up to 46,819,635 equity shares, as outlined in the company’s draft prospectus.

The proceeds from the fresh share issue will be allocated towards enhancing brand visibility, creating new exclusive brand outlets, and expanding the BBlunt salon network.

At present, the husband-wife co-founders collectively own a 43.54% stake, while Peak XV Partners is the other major shareholder with a 20.94% stake; Fireside Ventures and Stellaris follow with 15.01% and 11.24% stakes, respectively.

Peak XV Partners will not participate in the OFS. In March, Honasa CEO Varun Alagh confirmed that its largest investor, Sequoia (now rebranded as Peak XV Partners), would not be selling any shares in the IPO, and the founders would retain over 97% of their shares post-IPO.

Apart from the founders, other shareholders looking to reduce their holdings in the IPO include Sofina Ventures SA, Evolvence, Fireside Ventures, Stellaris, Kunal Bahl and Rohit Kumar Bansal of Snapdeal, Rishabh Harsh Mariwala of Sharrp Ventures, and Bollywood actress Shilpa Shetty Kundra.

For the fiscal year ending in March 2022, Honasa Consumer reported an operating income of Rs 456 Crores and a net profit of Rs 14.4 Crores.

Other notable players in the beauty and skincare segment include Nykaa, Purplle, The Good Glam Group, and Sugar Cosmetics.

The Last Bit,
As Mamaearth’s parent company, Honasa Consumer readies itself for its eagerly awaited IPO, the market is abuzz with anticipation.

With a strong focus on bolstering its brand presence and expanding its reach, the company aims to raise substantial capital.

The co-founders, along with their partners, are set to maintain a significant stake in the company.

As the beauty and personal care industry continues to thrive, Honasa Consumer’s IPO is likely to gain much traction.