Fireside Ventures, an early backer of the D2C unicorn Mamaearth, sold 60.89 lakh shares in the company, representing a 1.89% stake, in a bulk deal on Tuesday.
On Monday, there were reports indicating that the venture capital fund intended to offload 61 lakh shares in the company, valued at INR 230 crore, with a per-share price ranging from INR 368.7 to INR 384.1. Contrary to expectations, the shares were ultimately sold at INR 378 each, resulting in a transaction totaling nearly INR 230.2 crore.
After the NSE transaction, Honasa Consumer’s shares concluded the day’s trading session with a 4.4% decline, closing at INR 367.15. Similarly, on the BSE, the shares finished 5.1% lower, settling at INR 363.85.
It’s worth mentioning that the VC fund sold 79.7 lakh shares of Mamaearth during its IPO. With the stake divestment yesterday, Fireside has now realized a profit exceeding 4,600% from its investment in the company.
Mamaearth got listed on the bourses earlier last month. As per SEBI’s regulations, alternate investment funds (AIFs) of Category I or Category II with more than 20% of the pre-offer share capital are under a six-month lock-in period.
According to a Moneycontrol report, Category I AIFs with a stake of less than 20% of the pre-offer share capital are excluded from this lock-in requirement. This exemption exposes Mamaearth to a significant private equity overhang, given that some key holders are not subject to a lock-in period.
According to BSE data, Fireside’s Mamaearth shareholding amounted to 2.43 crore shares post-listing. Following yesterday’s share divestment, its holding is expected to be 1.83 crore shares, representing a 5.68% stake in Mamaearth. Meanwhile, Stellaris Venture, another Category I AIF, holds a 5.78% stake in the company.
The direct-to-consumer (D2C) unicorn had a subdued entry on the Indian stock exchanges in the previous month. Although it debuted with nearly a 2% premium on the NSE, the shares experienced a flat opening on the BSE, trading at INR 324 each.
After announcing its September quarter earnings on November 22, the Mamaearth stock reached an all-time high of INR 475.1 Cr on the BSE. Nevertheless, the share price plummeted subsequently due to profit booking.
Commenting on the stock’s performance, independent research analyst Ambareesh Baliga remarked that Mamaearth’s valuation was steep, and this was evident in the subdued response and listing.
“Sentimentally positive but I believe the spike was unjustifiable… An INR 15 Cr jump in net profit pushes up the market cap of the company by INR 5,000 Cr and that’s not sustainable,” Baliga said.
Regardless of this, the stock concluded yesterday’s trading session with a 12.3% increase from its listing price on the BSE.