Skicare brand Mamaearth has put its initial public offering (IPO) on hold citing weak market conditions, according to media reports, a month after two other Indian companies also scrapped their share sales.
Mamaearth parent Honasa Consumer filed its documents for an IPO in December, in a bid to raise about USD 200 - USD 300 million, through the issuing of new equity and an offer for sale of some existing shares, which could have valued the company at up to USD 3 billion.
Mamaearth is backed by investors such as Sequoia Capital and Belgium's Sofina. Founded in 2016 by Varun and Ghazal Alagh, Mamaearth has been betting on India's booming beauty and personal care market, which is estimated to expand to USD 30 billion by 2026 and has been growing by 12 per cent a year, per the company's IPO papers. Mamaearth was last valued at USD 1.2 billion in January 2022.
As per reports, Mamaearth planned to start marketing the IPO and begin initial talks with investors by the end of January, but that has not happened yet. In preliminary informal checks with investors, there was a difference in the valuation that the company was seeking and what investors were willing to give, the reports added.
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. Reports said that the company may reevaluate market conditions and start its marketing process by October if the sentiment improves.
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."
However, Varun Alagh said that the reports are "largely baseless." He added, "We are still in the IPO process. We are engaging with SEBI on IPO DRHP and it is reviewing our prospectus. We are hopeful that by next month, we should get our approval." Alagh stated that Mamaearth would talk with the financiers post the approval.
He also stated that the company's largest investor, Sequoia Capital, would not sell any shares in the IPO, and that the founders would own more than 97 per cent of their shares following the IPO.
Due to unfavourable market conditions, Indian garment retailer Fabindia, backed by billionaire Azim Premji's fund, and jewellery shop Joyallukkas cancelled their IPOs last month.