Mamaearth's parent puts IPO on hold. Here is why
2 min read 27 Mar 2023, 12:20 PM ISTAlagh said Mamaearth was engaging with SEBI for approval and would consult with bankers after that.
PremiumIndian skincare firm Mamaearth has delayed its initial public offering (IPO) due to unfavourable market conditions, according to two insiders.
This comes a month after two other Indian companies also cancelled their share sales.
Mamaearth's parent company, Honasa Consumer Ltd, had filed IPO documents in December 2022 with plans to raise between $200 million to $300 million through the issuance of new equity and an offer for the sale of some existing shares.
The valuation of the company was estimated to be up to $3 billion.
Backed by investors such as Sequoia Capital and Belgium's Sofina, Mamaearth is now in a "wait and watch mode", the sources said, given the turbulence in stock markets globally amid worries about the financial health of banks.
Mamaearth is a skincare startup founded in 2016 by the couple Varun and Ghazal Alagh. The company has been focusing on India's thriving beauty and personal care market, which is anticipated to expand to $30 billion by 2026, with an annual growth rate of 12%, according to the IPO documents filed by Mamaearth.
As of January 2022, Mamaearth was valued at $1.2 billion, but the firm's IPO was delayed due to weak market conditions.
Mamaearth, which had planned to initiate talks with investors and promote its IPO by the end of January, has postponed these plans due to challenging market conditions, according to two individuals with direct knowledge of the matter.
As per one of the sources, in preliminary discussions with investors, there was a difference between the valuation that Mamaearth was seeking and what investors were willing to offer.
The company has until December to receive approval for the IPO from the Securities and Exchange Board of India (SEBI) and file its final prospectus. It still plans to list, but with a delay, the sources said. It may reevaluate market conditions and start its marketing process by October if the sentiment improves, they said.
Mamaearth Chief Executive Varun Alagh did not specifically comment on the IPO being put on hold but said the company would not be "optimising for short-term valuations, we are in this for the long term".
Alagh said Mamaearth was engaging with SEBI for approval and would consult with bankers after that.
He added that its largest investor, Sequoia, would not be selling any shares in the IPO and the founders would own more than 97% of their shares after the IPO.
Last month, Indian apparel retailer Fabindia, backed by billionaire Azim Premji's fund, and jewellery retailer Joyallukkas scrapped their IPOs due to poor market conditions.
