Recently, as per the two reports, Indian skincare and beauty company Mamaearth has postponed the initial public offering (IPO) due to unstable market conditions.
This occurred a month after the two other companies withdrew their share sales.
Honasa Consumer Ltd., the parent company of Mamaearth, submitted IPO documents in December 2022, intending to raise $200 million to $300 million by issuing additional equity and selling certain existing shares.
The company’s valuation was predicted to be up to $3 billion.
The sources claim that due to the instability in stock markets throughout the world and worries about the financial condition of banks, Mamaearth, which is supported by investors like Sequoia Capital and Belgium’s Sofina, is currently in a “wait and watch mode.”
The skincare startup Mamaearth was established by Varun and Ghazal Alagh in 2016. According to the IPO documents submitted by Mamaearth, the firm has been concentrating on the expanding beauty and personal care sector in India, which is predicted to reach $30 billion by 2026 with a 12% annual growth rate.
Mamaearth was valued at $1.2 billion as of January 2022, but the company’s IPO was on hold because of unstable market conditions.
According to two people with firsthand experience with the scenario, Mamaearth has delayed these plans because of the challenging market conditions. Mamaearth had intended to start discussions with investors and promote its IPO by the end of January.
According to one of the sources, there was a discrepancy between the valuation Mamaearth was seeking and what investors were ready to provide during early negotiations with investors.
The firm has till December to get the Securities and Exchange Board of India’s (SEBI) permission for the IPO and file its final document. According to the sources, it still plans to list but with a delay. If the mood changes, they said, it might reevaluate market conditions and begin its marketing campaign by October.
Varun Alagh, the chief executive of Mamaearth, did not directly address the IPO being postponed, but he did mention that the company would not be “optimising for short-term valuations; we are in this for the long term.”
Alagh stated that Mamaearth was requesting approval from SEBI and would thereafter talk with bankers.
Moreover, he stated that Sequoia, the company’s largest stakeholder, would not be selling any shares in the IPO and that the founders would own more than 97% of the company’s shares following the IPO.
Due to adverse market conditions the previous month, Indian apparel retailer Fabindia, supported by billionaire Azim Premji’s fund, and jewellery shop Joyallukkas cancelled their IPOs.
