Mamaearth parent Honasa Consumer files for IPO; Shilpa Shetty, Kunal Bahl to sell stake
The initial public offering (IPO) market continues to see new offerings despite volatility in the secondary market. The new entrant in the IPO market is Honasa Consumer, the parent company of popular brand ‘Mamaearth’, which has filed its Draft Red Herring Prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI) to raise capital via public listing of shares. The company, which offers baby, skin, body, and hair care products, will raise funds through a combination of fresh issue of equity shares and offer for sale (OFS).
The issue comprises fresh issue of equity shares worth ₹400 crore and OFS of up to 46,819,635 equity share by promoters and existing shareholders. The two promoters Varun Alagh and Ghazal Alagh, as well as existing shareholders Rohit Kumar Bansal and Sofina Ventures will offload their stake in the company. Among other, Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl will also pare its shares in the company.
Honasa Consumer intends to use capital raised through net proceeds from fresh issue towards advertisement and capital expenses, investment in its subsidiary, and meet general corporate purposes. The company will invest ₹186 crore to meet advertisement expenses towards enhancing the awareness and visibility of its brands; ₹34.23 crore to incur capital expenditure for setting up new EBOs; and ₹27.52 crore for investment in its subsidiary, Bhabani Blunt Hairdressing for setting up new salons. A part of the fund will be also used to meet general corporate purposes and unidentified inorganic acquisition.
The OFS comprises up to 3,186,300 equity shares by Varun Alagh and up to 100,000 equity shares by Ghazal Alagh. Among existing shareholders, 777,672 equity shares will be offloaded by Kunal Bahl, 477,300 by Rishabh Harsh Mariwala, and 777,672 by Rohit Kumar Bansal.
Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited and J.P. Morgan India Private Limited are the Book Running Lead Managers to the issue.
As per the offer document, the primary objective of Honasa Consumer is to develop products that address beauty and personal care problems faced by consumers. It has added five new brands to its portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, and have built a ‘House of Brands’ architecture since launching Mamaearth in 2016. The company’s flagship brand, Mamaearth, is built to service a core customer need for safe-to-use, natural products, and focuses on developing toxin-free beauty products made with natural ingredients.
As of September 30, 2022, Honasa Consumer portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics, and fragrances segments.
According to RedSeer report, the company had grown its revenue from operations at a CAGR of 193.15% between Financial Years 2020 and 2022, from ₹109.78 crore in the financial year 2020 to ₹943.46 crore in FY22. As of September 30, 2022, Mamaearth has emerged as the fastest growing BPC brand in India to reach an annual revenue of ₹1,000 crore billion (in the preceding 12 months) within six years of launch.
Honasa Consumer has a in-house innovation team of 45 members, as of September 30, 2022, that drives end-to-end ideation and execution of new products launches. The company sales its products through omni-channel distribution networks across both online and offline touchpoints. It established scale across both online and offline channels and recorded the highest revenue from offline channels among digital-first BPC companies in India in FY22.