Mamaearth parent files for IPO; Sofina, Stellaris, Fireside eye partial exit

The IPO will comprise a fresh issue of ₹400 crore and an offer-for-sale (OFS) of up to 46.82 million shares, according to draft red herring prospectus (DRHP) filed with Securities and Exchange Board of India (Sebi) on Thursday.

The OFS will be around ₹2,500 crore, according to a person familiar with the development.

Mamaearth parent may consider a pre-IPO placement aggregating up to ₹80 crore, in which case, the amount to be raised from fresh issue will be deducted.

Mamaearth’s investors, including Sofina Ventures, Stellaris, Fireside Ventures, and Evolvence, are looking at a partial exit through the IPO. Fireside currently holds about 10.4% stake in the firm, Sofina holds about 9.5% stake, while Stellaris owns about 9.5% .

Varun Alagh, who currently holds 34.3% stake in the company, will dilute about 3% of his holding. Ghazal Alagh, who holds about 3.2%, aims to dilute about 1% of her stake.

Investors like Kunal Bahl, Snapdeal co-founder Rohit Bansal, Bollywood actor Shilpa Shetty Kundra, Sharrp Ventures’s Rishabh Mariwala will also dilute their stakes through the IPO.

Kotak Mahindra Capital, Citigroup Global Markets India, JP Morgan India, JM Financial are the book running lead managers to the issue.

The Gurugram-based firm, started in 2016 by husband-wife duo Ghazal and Varun Alagh, is backed by marquee investors including California-headquartered Sequoia Capital, Sofina Ventures, Belgium-based investment company and Evolvence, a UAE based fund. It entered the unicorn club earlier this year in January 2022, when it raised $52 million as a part of its Series F funding round.

The company aims to use the capital for advertisement expenses ( ₹186 crore), capital expenditure in exclusive brand outlets ( ₹34.23 crore)and investing its brand BBlunt for setting up new salons (27.5 crore), Honasa Consumer said in its DRHP.

The rest of the ₹152.2 crore will be used for general corporate purposes and unidentified inorganic acquisition.

Honasa Consumer , initially began with the launch of Mamaearth, has over the years added more brands including The Derma Co., Aqualogica, Ayuga, Bblunt and Dr. Sheth’s, to align with its vision of building ‘House of Brands’ architecture.

It has a portfolio of close to 140 products under the Mamaearth brand, and more than 40 items under The Derma Co.

In the year ended March 2022, the company doubled its revenue from operations of ₹943 crore, compared to ₹456 crore in the previous fiscal. It reported a profit of ₹14.4 crore in FY22.