Sequoia Capital-backed Indian skincare company Mamaearth is in talks to raise at least $ 300 million in a planned IPO next year and is seeking an estimate of about $ 3 billion, three people with direct knowledge of the company’s plans told Reuters.
Founded in 2016, Mamaearth has become popular in India with its range of toxin-free products such as face washes, shampoos and hair oils. It competes with the Indian division of Unilever, Hindustan Unilever and Procter & Gamble Co. in the thriving personal care industry.
The company was last valued at $ 1.2 billion in January this year when it raised new funds from investors, including Sequoia and Belgian Sofina.
Mamaearth is aiming for an estimate of about $ 3 billion – 10-12 times more revenue, said a person informed about the discussions. He plans to submit draft regulatory documents by the end of this year, sources said, declining to be named because the plan is private.
Two of these sources said Mamaearth was in the early stages of discussions to raise at least $ 300 million in an IPO, and a third source set the figure at $ 350 million.
A Mamaearth spokesman declined to comment on her IPO plans. The company’s target assessment of the IPO and the funds it plans to raise have not been announced before.
The company is in talks with JP Morgan Chase, India’s JM Financial and Kotak Mahindra Capital to appoint them as bookmakers, the sources added.
JP Morgan Chase declined to comment. JM Financial and Kotak did not respond immediately to requests for comment.
Mamaearth’s IPO plans come amid a wider devastation of capital markets and a slowdown in India’s thriving start-up ecosystem, which recorded a record $ 35 billion in record fundraising last year. Some startups are now cutting staff and finding it difficult to raise funds, Reuters reported.
Mamaearth is a co-founder of Varun Allah, a former CEO of Hindustan Unilever, and his wife Ghazal. With the brand endorsed by popular Bollywood celebrities, the duo has benefited from the growing spread of e-commerce in India by offering its products on platforms such as Amazon and Walmart’s Flipkart.
The Indian beauty and personal care industry is expected to grow to $ 27.5 billion by 2025 from $ 17.8 billion in 2020, according to Indian financial services firm Avendus. The number of online buyers of cosmetics is also expected to rise to 135 million from 25 million during this period, he added.
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However, a stock research analyst said Mamaearth’s IPO success could depend on how it plans to expand into offline sales quickly. Most Indians still go shopping to shop, with e-commerce accounting for only 5-6% of spending.
CEO Alagh told Business Standard in January that 70% of Mamaearth’s sales come from online platforms, but he is aiming for a larger offline presence and aims to reach 40,000 outlets in 100 cities this year.
For the fiscal year ended March 2022, Mamaearth’s mother, Honasa Consumer Pvt Ltd, reported revenue of $ 130 million with a small profit, said one of the three sources.
The company recorded after-tax profits of 246 million Indian rupees ($ 3.15 million) for the year ended March 2021.