Mamaearth IPO overvaluation is deep consern

Mamaearth has neither quoted nor subscribed to the valuation numbers which are doing the rounds on social media, co-founder of the company, Ghazal Alagh, said on Wednesday, clearing the air on the firm’s valuation for its initial public offering (IPO).

Responding to social media users who had expressed concerns regarding the Sequoia- and Sofina-backed company’s valuation demand, Alagh said, “In our DRHP, as is the standard practice, there is no mention of valuation.”. We have not quoted or subscribed to the valuation numbers which are getting mentioned in various posts on social media the co-founder of the personal care products startup wrote in a series of tweets.

Explaining further, Alagh said, “Valuation discovery is a process which will take place over time as we get into deeper conversations with the investor community.”.

Netizens have raised valuation concerns ever since Honasa Consumer Ltd, which owns new-age FMCG brands like Mamaearth and The Derma Co, filed papers with capital markets regulator Sebi to raise funds through an IPO.

‘ Disastrous’ and ‘extortion’– were some of the words used on Twitter to describe the valuation demand. Several investors have also taken to social media platforms to avoid the IPO.

The IPO comprises a fresh issue of equity shares worth 400 crores and an offer-for-sale (OFS) element of 4,68,19,635 equity shares by promoters, capitalists, and various other selling shareholders, according to the draft red herring prospectus (DRHP).

Those selling shares include marketers– Varun Alagh and Ghazal Alagh– and investors such as Fireside Ventures Fund, Sofina, Stellaris, Kunal Bansal and also, Rohit Bansal, Rishabh Harsh Mariwala of FMCG company Marico and Bollywood actor Shilpa Shetty Kundra.

The deal includes an appointment of as much as 10 crores for memberships by qualified workers. The company was last valued at $1.2 billion in January 2015 when it elevated $52 million from financiers, consisting of US-based Sequoia and Belgium’s Sofina. In January 2022, the business got into the unicorn club.

The startup had reported a consolidated restated revenue of 15.72 crores in the year finished 31 March 2022, its financial declaration showed. Earlier in June, Reuters had reported that Mamaearth was in talks to raise at least $300 million for the IPO set up for this year. Honda said it would utilize about 186 crores from the IPO for marketing expenses.

Kotak Mahindra Capital, Citigroup Global Markets India, JM Financial Ltd, and JP Morgan India Private Ltd are the book-running lead supervisors for the issue. The equity shares of the business will be provided on the BSE and NSE. Mamaearth was co-founded as a direct-to-consumer brand name by Varun Alagh, a previous Hindustan Unilever executive, and his better half Ghazal.

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