Honasa Consumer Pvt. Ltd, which operates direct-to-consumer brands Mamaearth and The Derma Co, has filed draft papers for an initial public offering (IPO) and is looking to raise around Rs 2,900 crore.
The IPO will comprise of a fresh issue of Rs 400 crore and an offer-for-sale (OFS) of up to 46.82 million equity shares, according to draft red herring prospectus (DRHP) filed with Securities and Exchange Board of India (Sebi). The OFS will be around Rs 2,500 crore, according to a person familiar with the development.
Marquee investors backing Mamaearth that include Sofina Ventures, Stellaris, Fireside Ventures, and Evolvence, will look to partially exit through the IPO. Sequoia is not looking to sell any stake currently.
Fireside currently holds about 10.4% stake in the firm, Sofina and Stellaris hold about 9.5% and Evolvence around 1.4%.
Varun Alagh, who currently holds 34.3% stake in the company, will dilute about 3% of his holding. Ghazal, 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.
The company aims to use the capital for advertisement expenses (Rs 186 crore), capital expenditure in exclusive brand outlets (Rs 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 Rs 152.2 crore will be used for general corporate purposes and unidentified inorganic acquisition.
The Mamearth parent may consider a pre-IPO placement aggregating up to Rs 80 crore, in which case, the amount to be raised from fresh issue will be deducted.
Kotak Mahindra Capital, Citigroup India, JP Morgan India and 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 Sequoia Capital apart from Sofina and Evolvence. 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.
Honasa Consumer, initially began with the launch of Mamaearth, has over the years added five 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 Rs 943 crore, compared to Rs 456 crore in the previous fiscal. It reported a profit of Rs 14.4 crore in FY22.