Mamaearth, an Indian skincare startup backed by Sequoia Capital, is in talks to raise at least $300 million in an IPO expected next year and is seeking a valuation of around $3 billion. dollars, 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 facial cleansers, shampoos and hair oils. It competes with the Indian unit of Unilever, Hindustan Unilever and Procter & Gamble Co in the booming personal care sector.
The company was last valued at $1.2 billion in January this year when it raised new money from investors such as Sequoia and Sofina in Belgium.
Mamaearth is targeting a valuation of around $3 billion, or 10 to 12 times forward earnings based on sales growth and future revenue potential, a person briefed on the talks said. It plans to file draft regulatory documents by the end of this year, said sources, who declined to be named because the plan is private.
Two of those sources said Mamaearth was in preliminary talks to raise at least $300 million in its IPO, with a third source putting the figure at $350 million.
A spokesperson for Mamaearth declined to comment on its IPO plans. The company’s target valuation for the IPO and the funds it plans to raise were not previously disclosed.
The company is in talks with JP Morgan Chase, India’s JM Financial and Kotak Mahindra Capital to appoint them as bookrunners for the deal, the sources added.
JP Morgan Chase declined to comment. JM Financial and Kotak did not immediately respond to requests for comment.
Mamaearth’s IPO plans come amid a broader rout in capital markets and a slowdown in India’s booming startup ecosystem which saw a record fundraising of $35 billion last year. Now some startups are downsizing and struggling to raise funds, Reuters reported.
Mamaearth was co-founded by Varun Alagh, a former Hindustan Unilever executive, and his wife Ghazal. With the brand endorsed by popular Bollywood celebrities, the duo have taken advantage of the growing adoption of e-commerce in India by offering their products on platforms such as Amazon and Walmart’s Flipkart.
India’s beauty and personal care industry is expected to grow to $27.5 billion by 2025, up from $17.8 billion in 2020, estimates Indian financial services firm Avendus. The number of online beauty shoppers is also expected to grow from 25 million to 135 million during this period, he added.
An equity research analyst, however, said Mamaearth’s IPO success could depend on how quickly it plans to expand in offline sales. Most Indians still visit outlets to shop, with e-commerce accounting for only 5-6% of spending.
CEO Alagh told the Business Standard newspaper in January that 70% of Mamaearth’s sales come from online platforms, but he is aiming for a bigger offline presence and aims to reach 40,000 outlets in 100 cities this year.
For the fiscal year ending March 2022, Mamaearth’s parent company, Honasa Consumer Pvt Ltd, posted revenue of $130 million, with a small profit, one of the three sources said.
The company recorded an after-tax profit of 246 million rupees ($3.15 million) for the fiscal year ending March 2021.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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