Skincare firm Mamaearth’s parent puts IPO on hold

Niva Bupa

MUMBAI: A month after two other Indian businesses abandoned their share sales, Indian skincare startup Mamaearth has postponed its initial public offering (IPO) due to sluggish market circumstances, according to two people with direct knowledge of the situation.
Honasa Consumer Ltd., the parent company of Mamaearth, submitted its IPO filings in December with the intention of raising between $200 million and $300 million through the sale of some existing shares and the issuance of additional equity, which could have valued the company at up to $3 billion.
According to the sources, Mamaearth, which is backed by investors like Sequoia Capital and Belgium’s Sofina, is currently in a “wait and watch mode” due to the turmoil in stock markets throughout the world and concerns about the financial stability of banks.
Varun and Ghazal Alagh, a husband and wife team who founded Mamaearth in 2016, have been betting on India’s developing personal care and cosmetics sector, which is predicted to reach $30 billion in sales by 2026 and has been expanding by 12% annually, according to the company’s IPO papers. The most recent valuation of Mamaearth was $1.2 billion in January 2022.

By the end of January, Mamaearth intended to begin marketing the IPO and holding preliminary discussions with investors, but neither of those things had taken place as of yet, according to the sources. According to one of the sources, there was a discrepancy between the valuation the company was seeking and what investors were ready to offer during early informal checks with investors.
The Securities and Exchange Board of India (SEBI) must approve the business’s IPO by the end of December in order for the company to file its final prospectus. According to the sources, it still intends to list but with a delay. If the mood changes, they suggested, it might reevaluate market conditions and begin its marketing campaign by October.

Varun Alagh, the chief executive of Mamaearth, did not directly address the IPO being postponed, but he did state that the business would not be “optimising for short-term valuations, we are in this for the long haul.”

Alagh stated that Mamaearth was requesting authorisation from SEBI and would thereafter talk with bankers.

The founders would own more than 97% of their shares following the IPO, he continued, and its largest investor, Sequoia, would not be selling any shares in the IPO.

Due to unfavourable market conditions, Indian garment retailer Fabindia, supported by billionaire Azim Premji’s fund, and jewellery shop Joyallukkas cancelled their IPOs last month.