The initial public offering of Honasa Consumer Ltd, which houses direct-to-consumer skincare brands Mamaearth and The Derma Co, was oversubscribed by 7.6 times at the end of bidding on Thursday.
The offering of 28.9 million shares, excluding the anchor allotment option, received bids for more than 220 million shares, stock-exchange data showed. This translates to bids worth Rs 7,130 crore ($857 million).
Institutional investors showed the most interest as their quota of shares was covered 11.5 times. Non-institutional investors, which include high-net-worth investors, bid for about four times the portion reserved for them. Retail investors bid for 1.35 times the number of shares set aside for them.
Mamaearth raised Rs 765 crore from anchor investors, including a bunch of mutual funds and insurance companies, ahead of the IPO.
The company is likely to list on the stock exchanges on Tuesday.
The startup, led by chief executive and co-founder Varun Alagh, filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India in December last year and received the regulator’s nod in August this year.
The company reduced the size of the fresh issue of shares in the IPO to Rs 365 crore from Rs 400 crore it was looking to raise previously. The IPO also includes an offer for sale of 41.25 million shares by the founders and investors, down from 46.82 million shares proposed to be sold earlier.
Mamaearth fixed a price band of Rs 308-324 per share for the IPO. At the top end, the offer for sale portion would fetch Rs 1,336 crore for the selling shareholders. The total size of the IPO would be Rs 1,700 crore ($204 million).
The selling shareholders include co-founders Varun and Ghazal Alagh. Varun, who holds a 34.13% stake in the company, is diluting about 3% while Ghazal, who holds about 3.2%, will sell an about 1% stake.
Belgium-based investment firm Sofina, and Indian venture capital firms Stellaris Venture Partners and Fireside Ventures are among the institutions that are selling shares. Sofina and Stellaris hold a 9.45% stake each in Mamaearth while Fireside Ventures holds a 10.34% stake.
Evolvence India Fund, a UAE-based alternative investment fund that backed the company in December 2021, and Peak XV Partners, (formerly Sequoia Capital India and Southeast Asia) are not selling any shares.
The company’s individual investors who are selling shares include Snapdeal co-founders Kunal Bahl and Rohit Bansal, actor Shilpa Shetty Kundra and Sharrp Ventures’s Rishabh Mariwala. Mariwala is selling 5.7 million shares, Kundra is offloading about 1.4 million shares and the Snapdeal co-founders are divesting almost 1.2 million shares each.