Mamaearth’s parent company, Honasa Consumer Ltd, has submitted its draught red herring prospectus for an initial public offering to the Securities and Exchange Board of India (SEBI) (IPO).
New issuance of shares worth Rs 400 crore will be made through the offer, together with an offer-for-sale (OFS) component for 46.82 million shares.
After audiotech brand Boat dropped its intentions for an IPO earlier this year blaming stormy market conditions, Honasa Consumer will probably be among the first new-age direct-to-consumer companies to have an IPO in India if it goes through.
Varun Alagh and Ghazal Alagh, as well as investors Sofina, Fireside Ventures, Evolvence India, Stellaris, and angel investors Kunal Bahl, Rohit Bansal, Rishabh Mariwala of FMCG giant Marico, and star Shilpa Shetty Kundra, will all part with their ownership of the company during the OFS.
The Gurugram-based firm, which also operates the Mamaearth brand and the brands The Derma Co. and BBlunt, was valued at $1.2 billion when it closed its most recent round of funding in January of this year. Sequoia Capital led the investment round for Mamaearth in January, but it is not offering its shares in the planned IPO.
During the period of April through September 2022, Honasa Consumer recorded revenue from operations of Rs 722.73 crore with a profit of Rs 3.67 crore, according to the offer document. Comparatively, operating revenue of Rs 943.46 crore, with a positive bottom line of Rs 14.43 crore, was reported for the fiscal year that ended on March 31, 2022.
Honasa is now the second new-age company, after Nykaa, to aspire for a listing as a successful company. Since they went public last year, startups like Paytm, Policybazaar, Zomato, and others have seen public market investors challenging their goals for profitability.
According to Honasa Consumer’s offer document, the company intends to use the IPO proceeds for general business objectives, unspecified inorganic acquisitions, and advertising costs. It also expects to invest in its subsidiary BBlunt to create more salons.
“We intend to utilise Rs 186 crore from the net proceeds towards marketing initiatives during financial years 2024, 2025, and 2026, including through offline and online media service agreements with entities that we engage in the ordinary course as well as any new vendors or agencies, as may be deemed appropriate,” the company said.