Honasa Consumer, the parent company of direct-to-consumer brands Mamaearth and Derma Co., is preparing for an initial public offering (IPO) expected before Diwali this year. The IPO could potentially value the company between Rs 10,000 crore and Rs 12,000 crore (USD 1.2 billion-USD 1.4 billion).
To facilitate the offering, Honasa is raising Rs 800 crore to Rs 900 crore from institutional investors for its anchor book and several investors, including Capital Group and Fidelity International, have expressed interest. This move marks a significant development for Mamaearth, which was valued at USD 1.2 billion in January 2022, entering the unicorn club when it raised USD 52 million. However, it has adjusted its valuation expectations since its previous IPO attempt faced criticism for targeting over USD 3 billion.
The decision to proceed with the IPO follows the clearance of the Gurugram-based company’s updated draft red herring prospectus (UDRHP) by the securities market regulator SEBI. The IPO will include a fresh issue of Rs 400 crore and an offer-for-sale (OFS) of up to 46.82 million shares, according to the draft red herring prospectus (DRHP) filed in December 2022.
The OFS, likely to be around Rs 1,500 crore to Rs 1,600 crore, will be conducted by existing shareholders looking to partially cash out, including Sofina Ventures, Stellaris, Fireside Ventures and others. The founders, Varun Alagh and Ghazal Alagh, hold approximately 37.5 per cent of the company’s stake, with Ghazal expected to monetize around 1 per cent of her share, while Varun plans to sell 3 per cent as part of the OFS.
Honasa Consumer, founded in 2016, specialises in selling safe cosmetics and personal care products and has expanded its portfolio with brands such as Derma Co., Aqualogica, Ayuga, Bblunt, and Dr. Sheth’s. It offers nearly 140 Mamaearth products and over 40 under the Derma Co. brand. For the fiscal year ending March 2022, the company reported operating income of Rs 456 crore, with a profit of Rs 14.4 crore. Financial results for FY23 have yet to be filed. Kotak Mahindra Capital, Citigroup Global Markets India, JP Morgan India and JM Financial are managing the share sale.
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