The Securities and Exchange Board of India (SEBI) has given a green signal to Honasa Consumer, the parent company of popular brand ‘Mamaearth’, to raise funds through the initial public offering (IPO) route. Earlier Mamaearth had delayed its IPO due to challenging market conditions.
As per Fortune, the capital market regulator, however, has put the proposed IPO of securities depository National Securities Depository Ltd (NSDL) in “abeyance”. The issuance of observations has been kept in abeyance due to an ongoing probe against National Stock Exchange (NSE), which is the second-largest shareholder in NSDL.
Fortune also reported that Honasa Consumer, owner of consumer brands like Mamaearth, The Derma Co., Aqualogica, and Ayuga, had filed its preliminary IPO papers with the SEBI in December 2022.
The report focused on the preliminary document filed with SEBI. Honasa Consumer, which offers baby, skin, body, and hair care products, plans to raise funds through a combination of fresh issue of equity shares and offer for sale (OFS). The issue comprises fresh issue of equity shares worth ₹400 crore and OFS of up to 46,819,635 equity shares by promoters and existing shareholders.
The two promoters Varun Alagh and Ghazal Alagh, as well as existing shareholders Rohit Kumar Bansal and Sofina Ventures will offload their stake in the company. Among others, Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl will also pare their shares in the company.
According to Fortune, Honasa Consumer’s goal is to use capital raised through net proceeds from fresh issues towards advertisement and capital expenses, investment in its subsidiary, and meet general corporate purposes. The company will invest ₹186 crore to meet advertisement expenses towards enhancing the awareness and visibility of its brands; ₹34.23 crore to incur capital expenditure for setting up new EBOs; and ₹27.52 crore for investment in its subsidiary, Bhabani Blunt Hairdressing for setting up new salons. A part of the fund will be also used to meet general corporate purposes and unidentified inorganic acquisition.