SEBI nod to IPO of Mamaearth parent; NSDL's put under ‘abeyance’

In latest development in the primary market, the Securities and Exchange Board of India (SEBI) has given a green signal to Honasa Consumer, the parent company of popular brand ‘Mamaearth’, to raise funds through the initial public offering (IPO) route. The capital market regulator, however, has put the proposed IPO of securities depository National Securities Depository Ltd (NSDL) in “abeyance". As per a report, the issuance of observations has been kept in abeyance due to an ongoing probe against National Stock Exchange (NSE), which is the second-largest shareholder in NSDL.

Honasa Consumer, which owns consumer brands like Mamaearth, The Derma Co., Aqualogica, and Ayuga, had filed its preliminary IPO papers with the SEBI in December 2022, while NSDL submitted its draft papers with the regulator on July 7 this year.

As per the preliminary document filed with SEBI, Honasa Consumer, which offers baby, skin, body, and hair care products, plans to 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 shares 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 others, Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl will also pare their shares in the company.  

Honasa Consumer, India’s largest digital-first beauty and personal care (BPC) company, intends to use capital raised through net proceeds from fresh issues 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.  

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.

Meanwhile, NSDL, India's first electronic securities depository, plans to raise around ₹3,000 crore through public offer, which is completely an OFS from key investors, including NSE, HDFC Bank, SBI, IDBI Bank, and SUUTI. The company will issue up to 57,260,001 equity shares of face value ₹2 each.

NSDL’ offer for sale of equity shares comprises up to 22,220,000 stocks by IDBI Bank; up to 18,000,001 equity shares by NSE; up to 5,625,000 by Union Bank of India; up to 4,000,000 by State Bank of India; up to 4,000,000 by HDFC Bank; up to 3,415,000 by administrator of the specified undertaking of the Unit Trust of India (SUUTI).

Among others, SEBI has also given approval to Mumbai-based Aeroflex Industries and health tech firm Indegene to raise funds through the public listing of shares on the domestic exchanges.

In recent times, the primary market has seen a surge in fundraising activities as companies rushed to list their stocks on the exchanges to take advantage of rally in the share market. As of today, three firms - Concord Biotech and other two from the SME (small and medium enterprise) segment - launched their initial public offerings (IPOs) to collectively raise around ₹1,600 crore. So far this year, domestic bourses, BSE and NSE, have seen 14 listings.