Mamaearth's parent company Honasa to put IPO on hold: report

Indian skincare company Honasa Consumer Limited which owns Mamaearth has put its initial public offering (IPO) on hold, according to a report by media agency Reuters. Sources whom Reuters spoke to cited weak market conditions as the reason behind this development.

The report also stated that the fast moving consumer goods company is in a "wait and watch" mode as the health of the global market remains uncertain.

In addition, Mamaearth planned to start marketing the IPO and begin initial talks with investors by the end of January, but that has not happened yet, the sources said. 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, one of the sources said.

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. It still plans to list, but with a delay, the sources said. It may reevaluate market conditions and start its marketing process by October if the sentiment improves, they said.

Business Today reached out to Mamaearth for a comment. The company responded back by saying, “This is to clarify we are still engaging with SEBI on our DRHP and awaiting formal approval for the same. Post the approval as is in line with the regulations we will have 12 months to file RHP and take the company public, which we will do in consultation with our bankers.”

Honasa Consumer filed its draft red herring prospectus in December last year. The company had proposed a fresh issue of equity shares aggregating up to Rs 400 crore and an offer for sale (OFS) of up to 46,819,635 shares.

The selling shareholders in the OFS would include actor Shilpa Shetty Kundra, Rohit Kumar Bansal, Sofina Ventures and Kunal Bahl, other than two promoters Varun Alagh and Ghazal Alagh.

Mamaearth's spokesperson also revealed, "As you are aware pricing and valuations will be discovered as part of our marketing roadshows as we start them. As discussed during our meeting neither is our largest investor selling a single share and also the promoters will continue to own over 97 per cent of their ownership in the company after the IPO hence we have no interest in optimizing for short term valuations, we are in this for the long term."

Also Read: What Mamaearth IPO papers tell investors about ITC, HUL, Marico & other traditional FMCG players