Honasa Consumer Limited (HCL), the parent company of the innovative direct-to-consumer beauty and personal care brand Mamaearth, is making strategic preparations for its anticipated initial public offering (IPO) set to take place on October 31, 2023.
On December 28, 2022, the company filed a Draft Red Herring Prospectus with the Securities and Exchange Board of India (SEBI).
As per a report by Moneycontrol, the anchor segment of the IPO is slated to commence on October 30. At present, there are no intentions for a pre-IPO fundraising round.
It’s important to highlight that HCL has set its sights on raising around INR 1,700 Crores through a blend of a fresh issue and an offer-for-sale, with a goal of achieving an estimated valuation of approximately INR 10,500 Crores.
The IPO is being managed by investment banking firms such as Kotak Mahindra Capital, JM Financial, Citi, and JP Morgan, with legal counsel offered by Cyril Amarchand Mangaldas, IndusLaw, and Khaitan & Co. The IPO will comprise a fresh issue of shares amounting to INR 400 Crores and an offer for sale of up to 46,819,635 equity shares, as outlined in the company’s draft prospectus.
The funds generated from the fresh issue will be allocated to intensifying marketing initiatives for increased brand recognition, establishing additional exclusive brand outlets, and extending the network of BBlunt salons.
As outlined in the Draft Red Herring Prospectus (DRHP), shareholders who aim to decrease their stakes consist of the Alaghs, Sofina Ventures SA, Evolvence, Fireside Ventures, Stellaris Venture Partners, Snapdeal founder Kunal Bahl, Bollywood actress Shilpa Shetty Kundra, Rishabh Harsh Mariwala, and Rohit Kumar Bansal. It’s worth noting that Sequoia Capital is not partaking in the offer for sale.
Established in 2016 by the husband-wife team of Varun and Ghazal Alagh, HCL operates a portfolio of brands, including Mamaearth, The Derma Co., Aqualogica, and Ayuga. Additionally, the company has invested in BBlunt and Dr. Sheths.
Mamaearth, among its brands, reached a notable achievement in FY22 by reporting a net profit of INR 19.8 Crores, marking a remarkable turnaround from the INR 1,332.2 Crores net loss in FY21. This transformation can be attributed to heightened customer loyalty rates and the expansion of sales channels, encompassing both online and offline platforms.
Mamaearth is poised to cross the INR 1,000 Crore revenue threshold. In FY22, the company’s total income surged by 101%, reaching INR 952.4 Crores, as opposed to INR 472.1 Crores in the preceding fiscal year. This doubling of revenue from operations, backed by Tiger Global, resulted in INR 931.7 Crores, compared to INR 459.9 Crores in FY21.
HCL attained unicorn status after a funding round in December 2022, where it successfully raised $52 million at a valuation of $1.2 billion. This round was spearheaded by the venture capital firm Peak XV (formerly known as Sequoia Capital).
As of September 2022, HCL’s online distribution network extended to more than 18,000 pin codes across India, making its products available in over 700 districts.
The e-commerce giant also sells products through more than 100,000 FMCG retail outlets in India. In the competitive beauty e-commerce landscape, it contends with Nykaa, Purplle, SUGAR, Wow Skin Science, and others.
Honasa is actively driving the expansion of its flagship brand, Mamaearth, into global markets with a robust growth strategy. The company is setting its sights on pivotal regions, including Bangladesh, Malaysia, Vietnam, and Thailand, where it intends to enhance Mamaearth’s footprint by forming partnerships with local distribution channels.
Honasa has successfully expanded into several international markets, including the UAE, Qatar, Nepal, Malaysia, Maldives, and Mauritius, primarily utilizing the Amazon platform for distribution.
It’s worth highlighting that the IPO activity in 2022 and 2023 has been affected by ongoing market volatility. Furthermore, it’s noteworthy that Honasa is currently entangled in several legal disputes. The Draft Red Herring Prospectus (DRHP) discloses that the company, along with its various subsidiaries, is embroiled in four criminal and civil litigations involving various individuals.